Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15%,
Question:
Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15%, payable at maturity.
a. How much interest (in dollars) will the firm pay on the 90-day loan?
b. Find the 90-day rate on the loan.
c. Annualize your result in part b to find the effective annual rate for this loan, assuming that it is rolled over every 90 days throughout the year under the same terms and circumstances.
Step by Step Answer:
a Interest 10000 015 90 ...View the full answer
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
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