EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 16, Problem 16P
a)
Summary Introduction
To determine: Annual percentage rate (APR) when credit terms are 2/10, net 60.
b)
Summary Introduction
To determine: Annual percentage rate (APR) when credit terms are 2/10, net 30.
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Calculate the finance charge (in $), the finance charge per $100 (in $), and the annual percentage rate for the installment loan by using the APR table. (Round dollar amounts to the nearest cent.)
AmountFinanced
Number ofPayments
MonthlyPayment
FinanceCharge
Finance Chargeper $100
APR
$17,950
48
$551.47
$
$
%
n the credit account statement below, the values of the annual percentage rate (APR), finance charge, and the new balance must be calculated.
PreviousBalance
AnnualPercentageRate (APR)
MonthlyPeriodicRate(as a %)
FinanceCharge(in $)
Purchasesand CashAdvances
PaymentsandCredits
NewBalance(in $)
$1,026.61
1.75%
$322.20
$300.00
Recall that the annual percentage rate (APR) is tied to the monthly periodic rate by the following formula.
monthly periodic rate =
APR
12
By solving this equation for the APR, the known value for the monthly periodic rate can be substituted to calculate the APR.
APR = monthly periodic rate ✕ 12
The monthly periodic rate is given to be 1.75%. Find the APR.
APR
=
12 ✕ monthly periodic rate
=
12 ✕ ____ %
=
____%
Calculate the finance charge (in $), the finance charge per $100 (in $), and the annual percentage rate for the installment loan by using the APR table, Table 13-1. (Round dollar amounts to the nearest cent.)
AmountFinanced
Number ofPayments
MonthlyPayment
FinanceCharge
Finance Chargeper $100
APR
$17,910
48
$550.47
$
$
%
Chapter 16 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 16 - Prob. 1QTDCh. 16 - Prob. 2QTDCh. 16 - Prob. 3QTDCh. 16 - Prob. 4QTDCh. 16 - Prob. 5QTDCh. 16 - Prob. 6QTDCh. 16 - Prob. 7QTDCh. 16 - Prob. 8QTDCh. 16 - Prob. 9QTDCh. 16 - Prob. 10QTD
Ch. 16 - Prob. 11QTDCh. 16 - Prob. 12QTDCh. 16 - Prob. 13QTDCh. 16 - Prob. 14QTDCh. 16 - Prob. 15QTDCh. 16 - Prob. 16QTDCh. 16 - Prob. 17QTDCh. 16 - Prob. 18QTDCh. 16 - Prob. 19QTDCh. 16 - Prob. 20QTDCh. 16 - Prob. 21QTDCh. 16 - Prob. 22QTDCh. 16 - Prob. 23QTDCh. 16 - Prob. 24QTDCh. 16 - Prob. 1PCh. 16 - Prob. 2PCh. 16 - Prob. 3PCh. 16 - Prob. 4PCh. 16 - Prob. 5PCh. 16 - Prob. 6PCh. 16 - Prob. 7PCh. 16 - Prob. 8PCh. 16 - Prob. 9PCh. 16 - Prob. 10PCh. 16 - Prob. 11PCh. 16 - Prob. 12PCh. 16 - Prob. 13PCh. 16 - Prob. 14PCh. 16 - Prob. 15PCh. 16 - Prob. 16PCh. 16 - Prob. 17PCh. 16 - Prob. 18PCh. 16 - Prob. 19PCh. 16 - Prob. 20PCh. 16 - Prob. 21PCh. 16 - Prob. 22PCh. 16 - Prob. 23PCh. 16 - Prob. 24PCh. 16 - Prob. 25PCh. 16 - Prob. 26PCh. 16 - Prob. 27PCh. 16 - Prob. 28PCh. 16 - Prob. 29PCh. 16 - Prob. 30PCh. 16 - Prob. 31PCh. 16 - Prob. 32PCh. 16 - Prob. 33PCh. 16 - Prob. 34P
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- Calculate the nominal annual cost of nonfree trade credit under each of the following terms. Assume that payment is made either on the discount date or on the due date. a. 1/15, net 20 b. 2/10, net 60 c. 3/10, net 45 d. 2/10, net 45 e. 2/15, net 40arrow_forwardCompute (A) bank discount, (B) proceeds for the following simple discount (use ordinary interest), and (C) the effective interest rate to nearest hundredth percent.Face Value = $12,000, Discount Rate = 10%, Time = 125 days Bank discount Simple discount Interest rate %arrow_forwardCalculate the finance charge (in $), the finance charge per $100 (in $), and the annual percentage rate for the installment loan by using the APR table, Table 13-1. (Round dollar amounts to the nearest cent.)arrow_forward
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