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Posted on Aug 28, 2024

If you are offered the following promissory notes, which note you will choose based on effective rate (using the calendar of 360 days a year)?

Use Simple Discounting.

Option 1

FV= 15,000

I=9%

T= 30 DAYS

REQUIRED: What is the effective rate?

OPTION 2

FV= 20,000

I=8%

T= 45 DAYS

REQUIRED: What is the effective rate?

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