Big Dom’s Pawn Shop charges an interest rate of 26 percent per month on loans to its customers. Like all lenders, Big Dom must report an APR to consumers.
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Q: Big Dom’s Pawn Shop charges an interest rate of 20 percent per month on loans to its customers. Like…
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Big Dom’s Pawn Shop charges an interest rate of 26 percent per month on loans to its customers. Like all lenders, Big Dom must report an APR to consumers. |
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- Big Dom’s Pawn Shop charges an interest rate of 20 percent per month on loans to its customers. Like all lenders, Big Dom must report an APR to consumers. What rate should the shop report?Big Dom's Pawn Shop charges an interest rate of 25.5 percent per month on loans to its customers. Like all lenders, Big Dom must report an APR to customers. What rate should the shop report? What is the effective annual rate?Springer Products wishes to borrow $90,000 from a local bank using its accounts receivable to secure the loan. The bank's policy is to accept as collateral any accounts that are normally paid within 30 days of the end of the credit period, as long as the average age of the account is not greater than the customer's average payment period. Springer's accounts receivable, their average ages, and the average payment period for each customer are shown in the following table: Customer Accounts Receivable Average age of account Average payment period of customer A $11,000 42 days 50 days B $25,000 70 days 65 days C $10,000 48 days 45 days D $28,000 55 days 50 days E $14,000 50 days 60 days F $19,000 21 days 35 days G $30,000 10 days 30 days H $16,000 25 days 40 days…
- Kumi Ltd permits its customers to pay with a credit card or to receive a percentage discount ? for paying cash. For credit card purchases, the company receives 97% of the purchase price one-half month later. Determine the value of ? that would make the two payment methods equivalent if the company’s annual rate of return is 14%.Big Dom’s Pawn Shop charges an interest rate of 26.8 percent per month on loans to its customers. Like all lenders, Big Dom must report an APR to consumers. a. What rate should the shop report? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) b. What is the effective annual rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)At the Central Furniture Company, customers who buy on credit pay an effective annual interest rate of 16.1%, based on monthly compounding. (a) What is the nominal annual interest rate that they pay? (b) Research the effective annual interest rates charged on a credit card that you or a friend has. How does the rate change if there is a late or skipped payment? What drives these rates? Are the rates ethical? Why or why not?
- Joseph Simpson, a student at State College, has an average balance of $250 on his retail charge card; if the store levies a finance charge of 22 percent per year, how much monthly interest will be added to his account? Assume that the balance is computed by the average daily balance method. Round the answer to 2 decimal places. $Ruby Wilson, a student at State College, has a balance of $350 on her retail charge card. If the store levies a finance charge of 22 percent per year, how much monthly interest will be added to Ruby’s account? Assume that the balance is computed by the average daily balance method. Assume a 30 day month. Round the answer to 2 decimal places. $A washer-dryer combination can be purchased from a department store by making monthly credit card payments of $56.86 for two-and-a-halfyears. The first payment is due on the date of sale and interest is 22% compounded monthly. (a) What is the purchase price? (b) How much will be paid in installments? (c) How much is the cost of financing? (d) If an additional $9.00 per month is added to cover a service contract, what is the value of the entire contract on the date of sale?
- A store offers its salespeople a table with coefficients to be applied to the cash sale value of its products if the customer needs to finance the purchase of the products. Assuming the store charges a compound interest rate of 6% p.m. in sales made on credit, calculate the value of these coefficients in the following situations:a) 12 monthly installments, the first being paid after thirty days; (0.119277)b) 24 monthly installments, the first of which is paid upon purchase; (0.075169) c) 36 monthly installments, the first being paid after six months. (0.091528)A store offers its salespeople a table with coefficients to be applied to the cash sale value of its products in case the customer needs to finance the purchase of the products. Considering that the store charges a compound interest rate of 6% per month on installment sales, calculate the value of these coefficients in the following situations: a) 12 monthly installments, the first being paid after thirty days. b ) 24 monthly installments , the first being paid upon purchase . c) 36 monthly installments, the first being paid after six months.Credit card issuers must by law print the annual interest rate they charged borrowers. If the annual interest rate is stated to be 15%, with interest paid monthly, what is the actual annual cost that the bank charges its customers on the card?
