A discount bank loan has a quoted annual rate of 6%. a. What is the effective rate

Question:

A discount bank loan has a quoted annual rate of 6%.
a. What is the effective rate of interest if the loan is for 1 year and is paid off in 1 payment at the end of the year?
b. What is the effective rate of interest if the loan is for 1 month?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals of Corporate Finance

ISBN: 978-1259024962

6th Canadian edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim

See More Books

Question Posted: Nov 14, 2017 02:32 AM

See More Questions

A bank loan has a quoted annual rate of 6%. However, the borrower must maintain a balance of 25% of the amount of the loan, and the balance does not earn any interest. a. What is the effective rate...
Childs Manufacturing has a discount bank loan that matures in one year and requires the firm to pay $2,950. Th e current market value of the firms assets is $3,400. The annual variance for the firms...
Josephine needs to borrow $180,000 to purchase her new house in Yarmouth, Nova Scotia. She would like to pay off the mortgage in 20 years, making monthly payments. For the initial three-year term,...
Solve Loe 4 (a) x (b) fo e-y/2 dy 8 X 1+x dx -6 1 ( c ) = = 14 dx (c) - 3 x -
Three factories 1, 2, 3 are each supplied underground by water, gas, and electricity, from poins A, B, C respectively. Show that this can be represented by K3,3 (the complete bipartite graph G = (S,...
How would you set up a study to evaluate the effects of an on-line training program versus a lecture-based approach?
A company has a central supply facility and a distribution center located 500 miles away. The central supply product cost is $20, TL transportation rates from central supply to the DC are $50 per...
The following are several of Graf Corporations accounts at the end of 2016: Account Credit Balance Common Stock, $10 par............. $ 47,100 Bonds Payable (due 2017)............ 126,000 Additional...
Bamum Enterprises is considering updating its computers with faster models that would aid in processing its sales invoices faster, and eliminate any overtime processing. Identify whether each item...
Consider the following 0x86 program: .data array DWORD 1,2,3,4,5,6,7,8,9 aravSize -(S-array)/4 ; array .code main PROC mov ecx,arraySize-1 mov esi.OFFSET array L1: mov eax. [esi] sda mov bx,2 idiv bx...
Go to finance.yahoo.com or ca.moneycentral.msn.com to get financial statements for companies to calculate and compare their internal growth rates and sustainable growth rates. At Yahoo dividend...
Here is a forecast of sales by National Bromide for the first 4 months of 2015 (figures in thousands of dollars): On average, 50% of credit sales are paid for in the current month, 30% in the next...
(Appendix B) How is operation costing similar to, and different from, both job costing and process costing?
f. The coordinates of two points A and B are (1, 2) and (5,7) respectively. Find the equation and slope of the line AB. g. Find the rate of change of the area of a circle w.r.t its radius r when r =...
1. Sketch the anticipated pattern of cracks on the beam structure shown below. Assume that the structure is adequately reinforced for the load shown, and that the loads are large enough to cause...
Estimate the hydrogen consumption required to completely remove the sulfur from a hydrotreater feedstock and to reduce the nitrogen content of the product to 15 ppm by weight. The 48.5 API naphtha...
2. Consider the following kinds of information, and suggest the most appropriate data type to store or represent each: Information Suggested Data Type String A person's name A person's age in years A...
Steam at 32 MPa, 520C enters the first stage of a supercritical reheat cycle including three turbine stages. Steam exiting the first-stage turbine at pressure p is reheated at constant pressure to...
Treatment of TiCl 4 with 4 equivalents of NaCp gives a single organometallic compound (together with NaCl byproduct). At room temperature the 1 H-NMR spectrum shows a single sharp singlet; on cooling...
Question 6.10 Current and deferred tax worksheets and tax entries From the hip Ltd?s statement of profit or loss for the year ended 30 June 2007 and extracts from its statements of financial position...
Calculating Flotation Costs the Huff Co, has just gone public. Under a firm commitment agreement, Huff received $15.05 for each of the 5 million shares sold. The initial offering price was $26 per...
Price Dilution CEO, Inc., 100,000 shares of stock outstanding. Each share is worth $80 so the companys market value of equity is $800,000. Suppose the firm issues 20,000 new shares at the following...
Dilution Teardrop Inc., wishes to expand its facilities. The company currently has 10 million shares outstanding and no debt. The stock sells for $50 per share, but the book value per share is $20....
Ted and his partners have contracted to purchase the franchise nights worth 561 000 to open and operate a specialty pizza restaurant called Popper with a renewable agrement, the partners have agreed...
Your answer is partially correct. Martin Company's chief financial officer feels that it is important to have data for the entire quarter especially since their financial forecasts indicate some...
Kellog Corporation is considering a capital budgeting project that would have a useful life of 4 years and would love testing 5156.000 in equipment that would have zeto salvage value at the end of...

A discount bank loan has a quoted annual rate of 6%. a. What is the effective rate

Question:

Step by Step Answer:

a The discount loan is for one year and interest is only paid once at the end of year annual The loa...View the full answer

Fundamentals of Corporate Finance

Students also viewed these Advanced Accounting questions