FOUND.OF FINANCIAL MANAGEMENT-ACCESS
FOUND.OF FINANCIAL MANAGEMENT-ACCESS
17th Edition
ISBN: 9781260519969
Author: BLOCK
Publisher: MCG
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Chapter 8, Problem 6P
Summary Introduction

To calculate: The effective rate of interest on the discounted loan.

Introduction:

Effective interest rate:

It is the rate to be paid on investments and loans over a specific period of time. It is also called annual equivalent rate.

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Sol Pine borrows $8,200 for one year at 12 percent interest. What is the effective rate of interest if the loan is discounted?
Safewell Co obtains a discount loan at a 12 percent interest rate.  Safewell borrows $100,000 for one year. What is the effective interest rate?
Jason Stein from Topeka, Kansas, borrows $1,500 (including interest) for four years (48 months) at an interest rate of 7% per year. The loan uses the discount method for determining the amount of interest. How much of the loan amount ($1,500) consists of interest?  How much of the loan is actually given directly to Jason?  What is the monthly payment (rounded to the nearest penny), assuming 48 monthly payments?

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FOUND.OF FINANCIAL MANAGEMENT-ACCESS

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