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pochemuha
3 years ago
6

Suppose Community Bank offers to lend you $10,000 for one year at a nominal annual rate of 6.50%, but you must make interest pay

ments at the end of each quarter and then pay off the $10,000 principal amount at the end of the year. What is the effective annual rate on the loan?
Business
1 answer:
Bad White [126]3 years ago
8 0

Answer:

  • <u><em>6.66%</em></u>

Explanation:

The effective annual rate, EAR, of a loan is calculated with the formula:

       EAR=\bigg[1+\dfrac{nominal\text{ }rate}{n}\bigg]^{n}}-1

Where:

  • nominal rate = annual percentage rate = 6.50%
  • n = number of periods = 4

Substituting and computing:

      EAR=\bigg[1+\dfrac{6.50\%}{4}\bigg]^{4}}-1=0.0666

Convert to percentage, multiplying by 100: 6.66%

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Answer:

$1,150

Explanation:

Implicit rental rate refers to the cost that a company incurred by spending money as opposed to what that money could earn if it were invested in something else. Therefore since in a year the computer was worth $1000 less and Wanda also lost out on the 5% that the savings account would have generated which would be $150. Then her total cost is that of $1,150

7 0
3 years ago
The statement, "You are more likely to control risks when they are identified earlier rather than later" is associated with what
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Answer:

Risk Control

Explanation:

The statement, "You are more likely to control risks when they are identified earlier rather than later" is associated with the Risk Control Management principle.

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3 years ago
What is the main difference between a generic market and a product market
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Answer:

The main difference between a generic market and a product-market is that: a generic-market involves a less similar set of needs than does a product-market. A basic difference between a "generic market" and a "product-market" is: how similar the competing sellers' products are.

Explanation:

7 0
2 years ago
in 1998 fischer corp issued bonds with an 8 percent coupon rate and a 1000 face value. the bonds mature on marc 1, 2023. if an i
ArbitrLikvidat [17]

Answer:

approximate YTM = 7.48%

Explanation:

the approximate yield to maturity = {coupon + [(face value - market value)/n]} / [(face value + market value)/2]

approximate YTM = {$80 + [($1,000 - $1,050)/15]} / [($1,000 + $1,050)/2]

approximate YTM = ($80 - $3.33) / $1,025

approximate YTM = $76.67 / $1,025

approximate YTM = 0.0748 ≈ 7.48%

5 0
3 years ago
Mary and Larry are purchasing a house for $198,000. They are making a down payment of $20,000, and they are approved for a confo
Amiraneli [1.4K]

Answer:

$11,880

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The maximum seller contribution should be 6% for confirming the loan as the down payment is more than 10%

So, the amount should be

= $6% of $198,000

= $11,880

7 0
3 years ago
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