Anne Lockwood, manager of Oaks Mall Jewelry, wants to sell on credit, giving customers 3 months in
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Anne Lockwood, manager of Oaks Mall Jewelry, wants to sell on credit, giving customers 3 months in which to pay. However, Anne will have to borrow from her bank to carry the accounts payable. The bank will charge a nominal 15 percent, but with monthly compounding. Anne wants to quote a nominal rate to her customers (all of whom are expected to pay on time) that will exactly cover her financing costs. What nominal annual rate should she quote to her credit customers?
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Here we want to have the same effective annual rate on the credit extended as on the bank loan that …View the full answer
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Related Book For
Financial management theory and practice
ISBN: 9780324422696
12th Edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
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