The Gallery offers credit to its customers at a rate of 1.6 percent per month. What is the effective annual rate (EAR or EFF%) of this credit offer? a) 7.06% b) 20.98% c) 13.20%

Q: To borrow $1,200, you are offered an add-on interest loan at 9 percent. Two loan payments are to be…

A: Borrowed Amount = $1,200 Interest Rate = 9% Time Period = 1 Years

Q: A loan of $1000 is paid off in 12 monthly payments of $120 each. What is the effective annual…

A: Borrowings are the liability that is used to finance the requirement of the funds. The borrower…

Q: A company has a collection period of 36 days and factors all receivables immediately at a discount…

A: Discount rate = 2.6%Number of days in a year = 365 daysCollection period = 36 days

Q: ARAB Bank pays 0.074 percent, compounded weekly (based on 52 weeks), on an 8-month certificate of…

A: The effective annual rate of interest is the real return on the savings account when the effects of…

Q: A private school wins $90000 in the first year that it established. These revenues increased to…

A: Here, Amount in first year (PV) = $90,000 Amount in ten years (FV) = $100,000 To Find: Gradient…

Q: A $10,000 credit supply has the following terms: trade terms are 5/5 net 50, interest rate 8%. What…

A: If the amount is paid within 5 days of invoice then the 5% discount will be allowed on net amount…

Q: A loan is taken out at j12 = 18% and is paid back with monthly payments of $279.00, plus a smaller…

A: Annual interest rate j12 = 18% (i.e compounding monthly)henceMonthly interest rate = 18% / 12 =…

Q: A company has a collection period of 37 days and factors all receivables immediately at a discount…

A: The company sells credit to their customer. The average number of days it takes a company to get…

Q: What is the monthly interest expense for the following open-end credit loan? Loan balance of…

A: The open ended credit loan you have to pay interest on balance amount used and calculation are done…

Q: pays a 9.75% nominal rate on deposits, with monthly compounding. What effective annual rate (EFF%)…

A: The effective annual rate can be computed as follows :- EAR = (1+i / x)^x - 1  = (1 + 0.0975/12)^12…

Q: On a 365-day basis, using a trade credit terms of 2/10, net 30, and payment is made on the twentieth…

A: In case of trade credit, 2% discount is being given if payment is made till 10th day.

Q: What are the nominal and effective costs of trade credit under the credit terms of 2/20, net 35?…

A: Credit terms specify the rate of discount a business can obtain when full payment is made within the…

Q: Your company are offered a bank loan with an annual percentage ate (APR) of 5 percent with quarterly…

A: We need to use effective annual rate formulas below Effective annual rate = 1+rnn -1          r =…

Q: What is the nominal annual percentate cost of the non-free trade credit if it pays within 120 days…

A: Nominal annual % cost of non-free trade credit = [ { Discount / ( 1 - Discount ) } x { 365 / ( Days…

Q: A supermarket charges 2.75% per month on credit purchases. What is the equivalent nominal annual…

A: Nominal rate is interest rate without the impact of compounding interest rate and it is like simple…

Q: A lender wished to earn an annual simple interest rate of 14%. What annual simple discount rate…

A: Banks frequently subtract basic interest from loan amounts at the moment the loan is originated.…

Q: On a 365-day basis, what is the rate per period of using trade credit if terms are 2/10, net 30, and…

A: On making payment till 10th day there is 2% discount. If payment is made between 11th till 30th day,…

Q: The effective annual rate (EAR) for a savings account with a stated APR of 4% compounded daily is…

A: Effective Annual Interest Rate Effective annual interest rate refers to the actual rate of interest…

Q: Haumea has been offered credit terms of discount of four percent if paid within thirty days, if not…

A: When goods are sold on credit, the seller extends short term finance to the buyer to make the…

Q: installment loan at 18%. The final payment is to be made on $238.42 principal.what is the final…

A: Loan: It refers to the amount of credit given by the lender to the borrower.  The borrower makes…

Q: The interest rate on a $118,000 loan is 8.9% compounded semiannually. The monthly payments on the…

A: a) To calculate the interest component of Payment 210, we first need to find the balance of the loan…

Q: A loan is offered with monthly payments and a 13 percent APR. What’s the loan’s effective annual…

A: Effective Annual Rate (Monthly Compounding) = [ 1 + APR / 12 ]12 - 1

Q: lender engages in a 15-day $1,000,000 reverse repo at a rate of 2.50%. The haircut is 2%. The…

A: In a reverse repo, the borrower will have to will give the collateral to lender and the lender will…

Q: A student has a total of $3,000.00 in student loans that will be paid with a 48-month installment…

A: A loan is a sort of debt that is taken on by an individual or another institution. The lender, which…

Q: A credit is paid as follows: a down payment corresponding to 30% of the value of the credit, 16…

A: Fist we need to calculate present value of all payments starting at 3 months after by using annuity…

Q: A P22,000 loan bearing interest at 9.6% compounded bimonthly was repaid, after a period of deferral…

A: Interest rate (r) = 9.6% per annum = 9.6%/24 per bimonthly = 0.4% Bimonthly payment (B) = P 2600…

Q: What is the APR in this case (5.5%, 18 month, single payment loan, $1000 principal)

A: APR stands for Annual Percentage Rate. It is a standardized way of expressing the cost of borrowing…

Q: A loan calls for 5 equal annual payments of $2,350. If the loan amount is $8,686, the interest rate…

A: Interest Rate -Interest Rate is a rate charged on the loan obtained. The loan is liabilities against…

Q: If the annualized cost of the trade credit discount is 7.37%, what is the net trade credit period?…

A: Trade credit is a form of financing provided by suppliers to their customers. It allows customers to…

Q: An automobile loan of $26,000 at a nominal rate of 12% compounded monthly for 48 months requires…

A: Amortization table is a schedule which shows periodic lease or loan payments. The periodic payment…

Q: Your company has just taken out a 1-year installment loan for $72,500 at a nominal rate of 11.0% but…

A: First we need to use loan amortization formula below to calculate monthly payment.  where P=Loann…

Q: A loan's nominal interest rate is 16%, APR. If the loan is payable monthly, the effective interest…

A: Effective annual interest rate is simply an effective rate of interest earned on any loan or…

Q: Compute the size of the final payment for the following loan. Principal Periodic Payment Payment…

A: Final payment refers to the amount of principal along with interest accrued and unpaid on the loan…

Q: 21) If the APR is 12% on a credit card with monthly compounding, what is the EAR ((1+r) B) 12.68% C)…

A: EAR means Effective annual rate.It is calculated by following formula:-EAR =  - 1where,EAR  =…

Q: A loan is to be amortized quarterly at P167,900.00 for three years. Find the outstanding principal…

A: Loan amount = L = P 167900 n = 3 years = 12 quarterly payments r = 8% per annum = 2% quarterly Let Q…

Q: On a 36-day basis, ir payment is made on the twentieth day under trade credit turms of 2/10, net 30.…

A: Liability: Liability is an obligation of any business. It is an amount borrowed by a business from…

Q: A $90,000 loan at 7.7% compounded semiannually requires monthly payments of $1,600. Calculate the…

A: A loan is a type of debt where a borrower borrows money from a lender with the agreement to repay…

Q: A loan of $13,000 at 5.65% annually requires $2938 interest. For how long is the money borrowed?

A: We need to use simple interest formula to solve this problem Simple interest =Principal*Rate*Time

Q: ys vs

A: Formula to calculate Effective annual rate: Discount rate/(1 - Discount rate)*(360/(Full allowed…

Q: What is the effective annual rate on a loan that charges 8.2 percent, compounded quarterly? Multiple…

A: Effective annual rate is computed by following formula:-Effective annual rate =  - 1 whereA =…

Q: A loan is offered with monthly payments and a 10 percent APR. What is the loan's effective annual…

A: In the given question we need to calculate the Effective annual rate (EAR) from the details given.

Q: A $90,000 loan at 7.7% compounded semiannually requires monthly payments of $1,600. Calculate the…

A: We need to first calculate the monthly payment of loan thereafter the number o0f periods of loan and…

Q: the accounts payable to 60 days? A) 28.03% OB) 1.7% OC) 12.65%

A: Discount rate=3%Discount period is 15 daysCredit period is 60 days.

Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.