Tillyard Inc. requires a $25,000 1-year loan. The bank offers to make the loan, and it offers
Fantastic news! We've Found the answer you've been seeking!
Question:
Tillyard Inc. requires a $25,000 1-year loan. The bank offers to make the loan, and it offers you three choices: (1) 15 percent simple interest, annual compounding; (2) 12 percent nominal interest, daily compounding (360-day year); (3) 10.2 percent add-on interest, 4 end-of-quarter payments. The first two loans would require a single payment at the end of the year, the third would require 4 equal quarterly payments beginning at the end of the first quarter. What is the difference between the highest and lowest effective annual rates?
Related Book For
Financial Management Principles and Applications
ISBN: 978-0133423822
12th edition
Authors: Sheridan Titman, Arthur Keown, John Martin
Posted Date: