Answered: 12. Ms. Smith borrowed P125,000 at 11%…

12. Ms. Smith borrowed P125,000 at 11% stated rate of interest and was to pay back the loan in 24 monthly payments. What is her effective rate of interest? A. 10.56% В. 18.96% С. 21.12% D. 22.00%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.

Question

12. Ms. Smith borrowed P125,000 at 11% stated rate of interest and was to pay back the loan in 24 monthly
payments. What is her effective rate of interest?
A. 10.56%
C. 21.12%
B. 18.96%
D. 22.00%

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