​(Annual percentage yield​) Compute the cost of the following trade credit terms using the compounding​ formula, or effective annual rate. Note​: Assume a​ 30-day month and​ 360-day year.   a. 3​/5​, net 30 b. 2​/15​, net 45 c. 3​/15​, net 60 d. 4​/10​, net

Q: Which of the following compounding rates is equivalent to an effective interest rate of 2.75% p.a.…

A: The effective interest rate also referred to as the annual equivalent rate or the effective rate is…

Q: A company has a collection period of 36 days and factors all receivables immediately at a discount…

A: Discount rate = 2.6%Number of days in a year = 365 daysCollection period = 36 days

Q: Explain the meaning of a 20% annual percentage rate (APR) quotedby the credit c.ird company? And how…

A: Answer: Annual percentage rate (APR) applies to the interest rate charged annually to borrowers and…

Q: An account has nominal rate of 5.7%. Find the effective annual yield, rounded to the nearest…

A:

Q: You Answered orrect Answer A one-year floating-rate note pays 6-month Libor plus 119 bps. The…

A: The information given is as follows:Time to maturity= 1 year6-Month Libor= 1.78%Quoted margin= 119…

Q: On a 365-day basis, using a trade credit terms of 2/10, net 30, and payment is made on the twentieth…

A: In case of trade credit, 2% discount is being given if payment is made till 10th day.

Q: What is the nominal annual percentate cost of the non-free trade credit if it pays within 120 days…

A: Nominal annual % cost of non-free trade credit = [ { Discount / ( 1 - Discount ) } x { 365 / ( Days…

Q: An account has a nominal rate of 6.6%. Find the effective annual yield, rounded to the nearest…

A: Effective annual yield (EAY) takes into consideration the impact of compounding frequency. In…

Q: Given i(26) = 6.375 %, find the equivalent nominal interest rate compounded monthly. Question…

A: Given information, Nominal interest rate compounded bi-weekly (i) = 6.375% or 0.06375Compounding…

Q: For the following investment, find the total number of compounding periods and the interest rate per…

A: Compounding periods = Years * Number of time compounded Compounding periods =8*4 Compounding periods…

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A: Back end ratio compares PITI (principal, interest, taxes and insurance) and other monthly debt…

Q: Cost of Trade Credit Calculate the nominal annual cost of trade credit under each of the following…

A: The nominal rate of credit = Discount rate1-discount rate×365credit period-discount perioid   1. The…

Q: ome instrument with a stated annual interest rate of 18% and offers weekly compounding has an…

A: The given problem can be solved using EFFECT function in excel. EFFECT function computes effective…

Q: Consider two loans with one-year maturities and id and a(n) 8.4% loan with a 4.5% (no-interest) comp…

A: Effective annual rate refers to the interest rate that is being charged by the lender to the…

Q: What is the annualized yield (rounded to three decimal places) on a seven-month U.S. Treasury bill…

A: Discount yield:The discount yield is a financial metric that measures the return on investment for…

Q: (Annual percentage yield) Compute the cost of the following trade credit terms using the compounding…

A: APR stands for annual percentage rate, which is regarded as the nominal rate, and EAR stands for an…

Q: Determine the effective rate of interest of the following nominal rates. a. nominal rates…

A: Effective interest rate formula  When Compounded annually and quarterly (1+r/n) n - 1  r= nominal…

Q: Assume an effective compound interest rate i = In each case, enter your answer as a percentage. a)…

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A: Nominal rate is without considering impact of compounding and while annual percentage yield is with…

Q: For life insurance policies, some of the premium pays for the cost of the insurance, and the…

A: Here, To Find: Part A. APY (Annual Percentage Yield) =? Part B. Higher yield offered =?

Q: If the effective annual interest rate is 12.82% and the nominal annual rate is 12.25%, compounding…

A: Effective Annual Rate = 12.82% Nominal Annual Rate = 12.25%

Q: A one-year floating-rate note pays 6-month Libor plus 90 bps. The floater is priced at 98.67 per 100…

A: Given:6-month LIBOR: 1.17%Coupon spread: 90 basis points (bps)Market price: 98.67% of par value

Q: Calculate the nominal annual cost of trade credit under each of the following terms. Assume a…

A: Business day to day working is also financed by means of trade credit. trade credit is the credit…

Q: An account has nominal rate of 6.5%. Find the effective annual yield,rounded to the nearest…

A: Nominal rate = 6.5% To Find: Effective interest rate (compounding  quarterly, monthly, and daily)

Q: If the effective annual interest rate is 10%, what is the nominal annual rate if compounding is bi-…

A: Interest rate refers to the percentage at which a borrower pays the interest amount on the loan…

Q: Which of the following compounding rates is equivalent to an effective interest rate of 2.75% p.a.?

A: When the compounding frequency per year is not 1 then in that case the stated interest rate will not…

Q: (Annual percentage yield) Compute the cost of the following trade credit terms using the compounding…

A: APR (r)=Discount % / (100-Discount%) * 360/(Net days - Discount days)n= 360/(Net days - Discount…

Q: The nominal interest rate compounded quarterly, ; (4) is 6%. Let i be the annual effective interest…

A: The cost of borrowing money or the return on investment represented as a percentage of the principal…

Q: 1. The semiannual interest rate equivalent to an effective monthly rate of 0.90% is equal to_ 2.…

A: In this problem we have to calculate effective interest rate and nominal interest rate.

Q: Compare the stated annual rate (r) to the effective annual rate (EAR). What relationship exists…

A: The effective annual rate of interest is the real return on the savings account when the effects of…

Q: Prepare a duration table under the following assumptions a. $100,000 fully amortizing loan b.…

A: A type of loan in which the borrower has to make a schedule for the periodic payment regarding both…

Q: To be equivalent to 10.6% compounded quarterly, what must be the nominal rate with: (Do not round…

A: The nominal return refers to the return quoted to the investor when they invest. It does not…

Q: On a 365-day basis, what is the effective annual rate of using trade credit if terms are 2/10, net…

A: If the payment is done in 10th day, the discount is given for 2 else full payment is required if…

Q: Consider the following term structure of interest rates: Maturity Interest Rate 1-year 4.6% 2-year…

A: Forward rates are the rates that would be applicable after a specified number of years, whereas spot…

Q: Find the effective interest rate (effective annual yield) of an investment that pays 10% per year…

A: Interest Rate = r = 10%Compound = n = Quarterly = 4

Q: If the effective annual interest rate is 9.58% and the nominal annual rate is 9.25%, compounding is:…

A: The effective annual rate (or the EAR) takes into consideration the impact of compounding.   On the…

Q: The major supplier of SS Corp. offers credit terms of 2/10, n / 35 What is the net benefit (in rate…

A: If the payment is made within 10 days the recipient will get a 2% discount and if the payment is…

Q: What is the net benefit (in rate or percent) of paying on the 35th day instead of obtained a loan…

A: Credit term refers to a method used by the firms to encourage buyer or debtor to pay the amount of…

Q: Construct NPV profiles for Plans A and B. B

A: WACC:Weighted average cost of capital (WACC) represents a company's average after-tax cost of…

Q: ys vs

A: Formula to calculate Effective annual rate: Discount rate/(1 - Discount rate)*(360/(Full allowed…