1.

Malone Posts, a commercial fencing company is negotiating with their bank for a short term loan. The loan will be used finance the building of a new warehouse during the construction period. They are unsure of exactly how much they will need in financing, but expect the building to take 280280 days to build. Okanagan Credit Union is willing to lend to them the funds at 7.77.7% but will charge a 10% administration fee, due up front at the beginning of the loan period.

What is the effective annual interest rate?

Answer: %Answer

Round to 2 decimal places (e.g. 4.25)

2. Your boss, Authur Shackle, one of the owners of Ram and Shackle Home Supplies does not see the point in paying his suppliers early when the discounts for doing so are "so small." You explain to him that actually, it may be costing him much more than the rate a bank would charge on a loan.

You take one of the supplier invoices, who offers terms 33/1212, n/3636 and calculate the effective interest rate to prove your point.

What is the effective interest rate of not taking the discount?

Answer: Answer

% Round to 2 decimal places (e.g. 4.25)