Tina Mier must pay a $5,000 furniture bill. A finance company will loan Tina $5,000 for 8 months at a 9.21% discount rate. The finance company told Tina that if she wants to receive exactly $5,000, she must borrow more than $5,000. The finance company gave Tina the following formula: What to ask for = Amount of cash to be received + (1 - (Discount ratex Time of loan)) a. Calculate Tina's loan request. Note: Do not round intermediate calculations. Round your final answer to the nearest cent. Loan request D b. Calculate the effective rate of interest. Note: Do not round intermediate calculations. Round your final answer to the nearest hundredth percent. Effective rate of interest
Tina Mier must pay a $5,000 furniture bill. A finance company will loan Tina $5,000 for 8 months at a 9.21% discount rate. The finance company told Tina that if she wants to receive exactly $5,000, she must borrow more than $5,000. The finance company gave Tina the following formula: What to ask for = Amount of cash to be received + (1 - (Discount ratex Time of loan)) a. Calculate Tina's loan request. Note: Do not round intermediate calculations. Round your final answer to the nearest cent. Loan request D b. Calculate the effective rate of interest. Note: Do not round intermediate calculations. Round your final answer to the nearest hundredth percent. Effective rate of interest
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 32P
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Transcribed Image Text:Tina Mier must pay a $5,000 furniture bill. A finance company will loan Tina $5,000 for 8 months at a 9.21% discount rate. The finance
company told Tina that if she wants to receive exactly $5,000, she must borrow more than $5,000. The finance company gave Tina
the following formula:
What to ask for = Amount of cash to be received + (1 - (Discount rate Time of loan))
a. Calculate Tina's loan request.
Note: Do not round intermediate calculations. Round your final answer to the nearest cent.
Loan request
b. Calculate the effective rate of interest.
Note: Do not round intermediate calculations. Round your final answer to the nearest hundredth percent.
Effective rate of interest
D
%
SE
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