Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Chapter 4, Problem 20QAP
Summary Introduction
To calculate: The effective annual rate and annual percentage rate of Company F.
Introduction:
The rate charged for borrowing annually or an annual rate gained through an investment is the annual percentage rate. The effective annual rate is the rate of interest that is expressed as if it were compounded once in a year.
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Students have asked these similar questions
Friendly's Quick Loans, Incorporated, offers you "$4.20 for $5.20 or I knock on your
door." This means you get $4.20 today and repay $5.20 when you get your paycheck in
one week (or else).
a. If you were brave enough to ask, what APR would Friendly's say you were paying?
(Do not round intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)
b. What's the effective annual return Friendly's earns on this lending business? (Do not
round intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
Answer is complete but not entirely correct.
1,056.46 %
23.81 %
a. APR
b. EAR
4
Scarlett borrowed $ 1,900 from a local payday lender and signed a debt contract requiring her to pay back $2,600 in three months. What is the quarterly rate? And what is the effective annual rate (EAR) of this loan? 2. You are hoping to start up a new business but require start-up capital. You are looking for a cheap loan to help start the business. You see a sign offering loans with a daily interest rate of 0.062%. What are the EAR and APR?
Your mother received an offer from a bank. The flier is offering your mother to open a credit card with that bank. The advertised rate on the flier is only 15%, which is considerably lower compared to other rates offered by competing banks. Then, in the fine print, it said that interest is paid monthly. Your mother asked you what that meant or what would be the effect of that if any. What would you tell her? Compute for the EFF %. How would you explain to her why there is a difference between the 15% and the rate that you computed?
Dont use excel
Chapter 4 Solutions
Corporate Finance
Ch. 4 - Prob. 1CQCh. 4 - Prob. 2CQCh. 4 - Prob. 3CQCh. 4 - Prob. 4CQCh. 4 - Time Value On subsidized Stafford loans, a common...Ch. 4 - Prob. 6CQCh. 4 - Prob. 7CQCh. 4 - Prob. 8CQCh. 4 - Prob. 9CQCh. 4 - Prob. 10CQ
Ch. 4 - Simple Interest versus Compound Interest First...Ch. 4 - Prob. 2QAPCh. 4 - Prob. 3QAPCh. 4 - Calculating Interest Rates Solve for the unknown...Ch. 4 - Prob. 5QAPCh. 4 - Prob. 6QAPCh. 4 - Prob. 7QAPCh. 4 - Calculating Rates of Return Although appealing to...Ch. 4 - Prob. 9QAPCh. 4 - Prob. 10QAPCh. 4 - Present Value and Multiple Cash Flows Specter Co....Ch. 4 - Prob. 12QAPCh. 4 - Calculating Annuity Present Value An investment...Ch. 4 - Prob. 14QAPCh. 4 - Prob. 15QAPCh. 4 - Prob. 16QAPCh. 4 - Calculating EAR First National Bank charges 11.4...Ch. 4 - Prob. 18QAPCh. 4 - Calculating Number of Periods One of your...Ch. 4 - Prob. 20QAPCh. 4 - Prob. 21QAPCh. 4 - Simple Interest versus Compound Interest First...Ch. 4 - Calculating Annuities You are planning to save for...Ch. 4 - Prob. 24QAPCh. 4 - Prob. 25QAPCh. 4 - Prob. 26QAPCh. 4 - Prob. 27QAPCh. 4 - Prob. 28QAPCh. 4 - Prob. 29QAPCh. 4 - Prob. 30QAPCh. 4 - Calculating Interest Expense You receive a credit...Ch. 4 - Prob. 32QAPCh. 4 - Growing Annuity Southern California Publishing...Ch. 4 - Prob. 34QAPCh. 4 - Prob. 35QAPCh. 4 - Prob. 36QAPCh. 4 - Prob. 37QAPCh. 4 - Calculating Loan Payments You need a 30-year...Ch. 4 - Prob. 39QAPCh. 4 - Prob. 40QAPCh. 4 - Prob. 41QAPCh. 4 - Prob. 42QAPCh. 4 - Prob. 43QAPCh. 4 - Prob. 44QAPCh. 4 - Prob. 45QAPCh. 4 - Prob. 46QAPCh. 4 - Prob. 47QAPCh. 4 - Prob. 48QAPCh. 4 - Prob. 49QAPCh. 4 - Prob. 50QAPCh. 4 - Prob. 51QAPCh. 4 - Prob. 52QAPCh. 4 - Prob. 53QAPCh. 4 - Prob. 54QAPCh. 4 - Prob. 55QAPCh. 4 - Prob. 56QAPCh. 4 - Prob. 57QAPCh. 4 - Prob. 58QAPCh. 4 - Prob. 59QAPCh. 4 - Prob. 60QAPCh. 4 - Prob. 61QAPCh. 4 - Prob. 62QAPCh. 4 - Prob. 63QAPCh. 4 - Prob. 64QAPCh. 4 - Prob. 65QAPCh. 4 - Prob. 66QAPCh. 4 - Prob. 67QAPCh. 4 - Prob. 68QAPCh. 4 - Prob. 69QAPCh. 4 - Prob. 70QAPCh. 4 - Prob. 71QAPCh. 4 - Prob. 72QAPCh. 4 - Prob. 73QAPCh. 4 - Prob. 74QAPCh. 4 - Rule or 69.3 A corollary to the Rule of 72 is the...Ch. 4 - Prob. 1MCCh. 4 - Prob. 2MCCh. 4 - Prob. 3MCCh. 4 - Prob. 4MCCh. 4 - Prob. 5MC
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