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Mama inc. offered a one-year loan to a customer client. The instrument is a discounted note with a nominal rate of 15%. Determine the effective interest rate to the borrower.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 12P

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Mama inc. offered a one-year loan to a customer client. The instrument is a discounted note with a nominal rate of 15%. Determine the effective interest rate to the borrower.

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