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You want to borrow $24,000 for a tax payment. Your friend offers you a loan, and he claims that he

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You want to borrow $24,000 for a tax payment. Your friend offers you a loan, and he claims that he will only charge you 10% interest. He calculates that the total interest of the loan will be $24,000 3 10% 5 $2,400, so he deducts this amount from the loan, gives you $21,600, and tells you to repay $24,000 in one year. Has your friend charged you 10% interest? What is the real interest rate charged on the loan?

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Your friend s calculation of the interest is incorrect and he has ac…View the full answer


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Related Book For  answer-question
Principles Of Managerial Finance

Principles Of Managerial Finance

ISBN: 9781292018201

14th Global Edition

Authors: Lawrence J. Gitman, Chad J. Zutter

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Question Details
Chapter # 5- Time Value of Money
Section: Problems
Problem: 44
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Question Posted: September 08, 2023 09:09:34
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