Question

P4-13 (similar to) Question Help Annuity due. Reginald is about to lease an apartment for 12 months. The landlord wants him to make the lease payments at the start of the month. The monthly payments are $1,000 per month. The landlord says he will allow Reg to prepay the rent for the entire lease with a discount. The one-time payment due at the beginning of the lease is $11,368. What is the implied monthly discount rate for the rent? If Reg is earning 0.8% on his savings monthly, should he pay by month or make the one-time payment? What is the implied monthly discount rate for the rent? % (Round to two decimal places.)

Answer 1

Function Arguments ? x RATE Nper 12 Pmt 1000 -11368 Evo Type 11 1 1 1 = 12 = 1000 = -11368 1 = 1 = 0.009993862 Returns the interest rate per period of a loan or an investment. For example, use 6%/4 for quarterly payments at 6% APR. Type is a logical value: payment at the beginning of the period = 1; payment at the end of the period = 0 or omitted. Formula result = 1.00% Help on this function D OK Cancel

Hence, Implied monthly discount rate is 1.0%

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