A local finance company quotes a 17 percent interest rate on one-year loans. So, if you borrow $23,000, the interest for the year will be $3,910. Because you must repay a total of $26,910 in one year, the finance company requires you to pay $26,910 divided by 12, or $2,242.50, per month over the next 12 months. Is this a 17 percent loan? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) What rate would legally have to be quoted? Annual percentage rate % What is the EAR? Effective annual rate %

A local finance company quotes a 17 percent interest rate on one-year loans. So, if you borrow $23,000, the interest for the year will be $3,910. Because you must repay a total of $26,910 in one year, the finance company requires you to pay $26,910 divided by 12, or $2,242.50, per month over the next 12 months. Is this a 17 percent loan? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) What rate would legally have to be quoted? Annual percentage rate % What is the EAR? Effective annual rate %

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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