Question
Commonwealth Bank has told your friend that the monthly payments he will makeare$400.However,the bank hasnotrevealedthe interestrateitusedtocalculatethispayment.It did state that all loans are calculated using monthly
Commonwealth Bank has told your friend that the monthly payments he will makeare$400.However,the bank hasnotrevealedthe interestrateitusedtocalculatethispayment.It did state that all loans are calculated using monthly compounding.
(a)What is the annual nominal interest rate on this loan? (2 marks)
(b) What is the effective annual rate? (2 marks)
(c) Which loan should your friend choose, and why? Evaluate your findings. (4 marks)
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Contemporary Business Mathematics with Canadian Applications
Authors: S. A. Hummelbrunner, Kelly Halliday, K. Suzanne Coombs
10th edition
133052311, 978-0133052312
