Question

Your bank will lend you $2,000 for 45 days at a cost of $25 interest.

a. What is your annual rate of interest? (Use 365 days in a year. Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Annual rate of interest _____%

b. What is your effective annual rate? (Use 365 days in a year. Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Effective annual rate _____%

Answer 1

SOLUTION :

a.

Annual rate of interest 

= Interest rate for the period * number of periods in a year

= 25/2000  * 365/45

= 0.1014

= 10.14 % (ANSWER).

b.

Effective annual rate

= ( 1 + interest rate of the period)^ (number of periods in a year) - 1

= (1 + 25/2000)^(365/45) - 1

= 0.1060

= 10.60 % (ANSWER).

Answer 2

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

@ 1x - ENG 12:18 20-03-2020 23 X J164 fix X J I K L M N O P Q R S T U V A 148 149 150 151 2000 152 LOAN AMOUNT INTEREST LOAN PERIOD 153 DAYS 154 ANNUAL RATE OF INTEREST = ANNUAL RATE OF INTEREST 10.1389% 10.14% 158 EFFECTIVE ANNUAL RATE HERE WILL BE = EFFECTIVE ANNUAL RATE HERE WILL BE = (1+ (0.101389/(365/45))^(365/45) - 1 10.60% 160 162 164 170 171 ... cash opti LINE OF CREDIT Sheet5 eoq miller CARD BANKER ACCEPTANC FACTOR SI DISC FOCAL WC REQUIRE Sheet3 Sheet4