As a jewelry store manager, you wantto offer credit, with interest on outstanding balances paid monthly. To carry receivables,you must borrow funds from your bank at a nominal 9%, monthly compounding. To offsetyour overhead, you want to charge your customers an EAR (or EFF%) that is 3% more thanthe bank is charging you. What APR rate should you charge your customers?

As a jewelry store manager, you wantto offer credit, with interest on outstanding balances paid monthly. To carry receivables,you must borrow funds from your bank at a nominal 9%, monthly compounding. To offsetyour overhead, you want to charge your customers an EAR (or EFF%) that is 3% more thanthe bank is charging you. What APR rate should you charge your customers?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 32P

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As a jewelry store manager, you want to offer credit, with interest on outstanding balances paid monthly. To carry receivables, you must borrow funds from your bank at a nominal 9%, monthly compounding. To offset your overhead, you want to charge your customers an EAR (or EFF%) that is 3% more than the bank is charging you. What APR rate should you charge your customers? Do not round intermediate calculations. Round your answer to two decimal places.
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