Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:28. INTERNATIONAL BUSINESS Lesly Pacas bor-
rows 300,000 pesos for 90 days at 12% per year to
remodel her hair salon. She lives in Guadalajara,
Mexico, where the rate would have been 35% a de-
cade ago. Find the difference in the interest charges
based on the different rates.
Expert Solution
Step 1
Interest rate is the net amount of interest expense which is expressed as a fixed percentage of principal amount that a borrower pays on the amount of funds acquired by him or her from the lender.
This rate of interest is the charge of lease or rental expense that a borrower pays to the lender for the amount acquired by him for a specified period of time.
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