31.7 The discount is 4%. So for every $100 that you undertake to repay in month 6,...
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31.7 The discount is 4%. So for every $100 that you undertake to repay in month 6, you receive up-front $98. The six-month interest rate is 100/98 – 1 = 0.02041. The effective annual rate is 1.020412 – 1 = 0.0412 or 4.12%.
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Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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