A short-term loan of £5,000 is repayable in 25 days at a simple rate of interest of 6% p.a. Assuming that 1 year is equivalent to exactly 365 days, calculate the following: (i) The amount of interest, to the nearest £0.01, accrued on the loan in 25 days; (ii) The annual effective rate of discount equivalent to this transaction, to the nearest 0.01%; (iii) The annual nominal rate of discount convertible monthly equivalent to this transaction, to the nearest 0.01%.
A short-term loan of £5,000 is repayable in 25 days at a simple rate of interest of 6% p.a. Assuming that 1 year is equivalent to exactly 365 days, calculate the following: (i) The amount of interest, to the nearest £0.01, accrued on the loan in 25 days; (ii) The annual effective rate of discount equivalent to this transaction, to the nearest 0.01%; (iii) The annual nominal rate of discount convertible monthly equivalent to this transaction, to the nearest 0.01%.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
PLEASE, WRITE THE SOLUTIONS ON PAPER, EXPLAINING THE ENTIRE PROCESS, THE ONLY AND CORRECT SOLUTIONS ARE FOR (i) I = £20.55 AND (ii) d = 5.81% pa AND (iii) d^12 = 5.97% pa
Transcribed Image Text:A short-term loan of £5,000 is repayable in 25 days at a simple rate of interest of 6% p.a.
Assuming that 1 year is equivalent to exactly 365 days, calculate the following:
(i)
The amount of interest, to the nearest £0.01, accrued on the loan in 25 days;
(ii)
The annual effective rate of discount equivalent to this transaction, to the nearest 0.01%;
(iii) The annual nominal rate of discount convertible monthly equivalent to this transaction, to
the nearest 0.01%.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 3 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education