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Tanya [424]
3 years ago
15

A local finance company quotes an interest rate of 17.1 percent on one-year loans. So, if you borrow $20,000, the interest for t

he year will be $3,420. Because you must repay a total of $23,420 in one year, the finance company requires you to pay $23,420/12, or $1,951.67, per month over the next 12 months. Is the interest rate on this loan 17.1 percent?
a. What rate would legally have to be quoted? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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:
lions [1.4K]3 years ago
3 0

Answer:

If you pay $1,951.67 per month, then the interest rate on this loan is not 17.1%

a. The rate should be legally quoted 2.52% per month

b.  The effective annual rate is 30.2%

Explanation:

We can use excel to calculate for the actual rate charged on loan $20,000 with equal monthly installment of $1,951.67 by function rate = Rate(number of payments, amount paid monthly,loan value) = (12,-1951.67,20000,,,)

Please see excel attached for better understanding.

Download xlsx
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The journal entry for the sale would include a credit to sales tax payable for $156 if the selling price of the merchandise is $2600.

The government levies a consumption tax known as a sales tax on the purchase of goods and services. At the point of sale, a standard sales tax is imposed, collected by the retailer, and paid to the government. Companies must first apply for a sales tax permit from their state's department of taxation in order to be able to collect sales tax from customers. Every time a customer makes a purchase, businesses collect sales tax, which they subsequently monthly or quarterly send to the state.

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To know more about  sales tax refer:

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