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Ainat [17]
3 years ago
15

Big Dom’s Pawn Shop charges an interest rate of 27 percent per month on loans to its customers. Like all lenders, Big Dom must r

eport an APR to consumers. a. What rate should the shop report? b. What is the effective annual rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Business
1 answer:
Bad White [126]3 years ago
7 0

Answer:

a. 324%

b. 16.61%

Explanation:

a. The computation of the APR is the annual rate of interest which is shown below:

= Interest per month × number of months in a year

= 27% × 12 months

= 324%

b. And, the  effective annual rate would be

=  (1 + interest rate per month) ^ Number of months in a year - 1

= (1 + 27%) ^ 12 -1

= 1.27 ^ 12 -1

= 17.6053 - 1

= 16.61%

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2 years ago
The company's wacc is 10. 5%. what is the irr of the better project? (hint: the better project may or may not be the one with th
Simora [160]

The better Project is Project S having a NPV of $17.968 and IRR of 12.10 %

IRR:

  • An approach to capital budgeting that is used to assess the profitability of a project is the discounted payback time. Internal rate of return is one of these capital planning strategies (IRR).
  • This rate of return corresponds to the point at which a project's net present value equals zero. Since it does not account for any outside forces, such as inflation, they call it internal.

The calculator's capabilities will be utilized to determine the IRR,

Project S

  • CF0 = (1,000)
  • CF1 = 882.62 & F01 = 1
  • CF2 = 250 & F02 = 1
  • CF3 = 15 & F03 = 1
  • CF4 = 5 & F04 = 1
  • I = 10.5%
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  • [IRR] [CPT]
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  • Project L
  • CF0 = (1,000)
  • CF1 = 0 & F01 = 1
  • CF2 = 260 & F02 = 1
  • CF3 = 420 & F03 = 1
  • CF4 = 732.87 & F04 = 1
  • I = 10.5%
  • [NPV] [CPT]
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  • [IRR] [CPT]
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Learn more about IRR here brainly.com/question/7920964

#SPJ4

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2 years ago
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Answer:

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