Answered: ts, which amounts to monthly…

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ts, which amounts to monthly compounding. What is the effective annual rate? a. 24.23%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2P: Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for...

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Question

Suppose your credit card issuer states that it charges a 22.50% nominal annual rate, but you must make monthly payments, which amounts to monthly compounding. What is the effective annual rate?

a. 24.23%

b. 24.97%

c. 22.50%

d. 24.47%

e. 23.77%

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