A real estate agent knows that he will receive a commission of $4,250 from the sale of a property when the deal is completed 37

Question

3 years ago

9

A real estate agent knows that he will receive a commission of $4,250 from the sale of a property when the deal is completed 37

days from now. Needing cash today, though, he signs a discount note at a credit union, using his expected commission as the maturity value. The discount rate is 9.55%. Find the effective rate (APR).

Mathematics

1 answer:

Jlenok [28] · Answer 1 · 2022-09-13T05:18:49+03:00

Jlenok [28]3 years ago

7 0

The effective rate can be conveniently calculated from
.. effective rate = r/(1-rt)
Assuming a 365 day year, this is
.. = 9.55%/(1 -0.0955*(37/365))
.. ≈ 9.64%