add calculations

1 CALC Question 5 Cash Discount/Line of Credit (6 marks: 10 minutes) Please include calculations in the calculation area. 2 3 Your bank will lend you $4,000 for 30 days at a cost of $40 interest. 4 5 6 7 8 a. What is your annual rate of interest? (2 marks) Answer: 9 LO 1 b. What is your effective annual rate use an Excel function to calculate this and show how you calculated it. (2 marks) 2 3 7 Answer: c. Explain why there is a difference between annual and effective rates of interest. (2 marks) 11 b. What is your effective annual rate use an Excel function to calculate this and show how you calculated it. (2 marks) 12 13 14 15 16 17 18 Answer: c. Explain why there is a difference between annual and effective rates of interest. (2 marks) a 19 20 21 22 23