Mr. J. Dela Cruz borrowed money from a bank and he receives P1,340.00 and promised to pay P1,500 at the end of 9 months. What is the effective rate corresponding to 18% compounded daily? Take 1 year is equal to 360 days.

Mr. J. Dela Cruz borrowed money from a bank and he receives P1,340.00 and promised to pay P1,500 at the end of 9 months. What is the effective rate corresponding to 18% compounded daily? Take 1 year is equal to 360 days.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 15E

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Mr. J. Dela Cruz borrowed money from a bank and he receives P1,340.00 and promised to pay
P1,500 at the end of 9 months. What is the effective rate corresponding to 18% compounded
daily? Take 1 year is equal to 360 days.

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