Assuming a purchase of $100 of products, what is the implicit interest rate in the credit terms of 1/2, net 60? A 1.00% B 2.00% 0.50% D 6.53% Greater than 25%.
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- Calculate the nominal annual cost of nonfree trade credit under each of the following terms. Assume that payment is made either on the discount date or on the due date. a. 1/15, net 20 b. 2/10, net 60 c. 3/10, net 45 d. 2/10, net 45 e. 2/15, net 40Assume that l2t =0.25% and that l1t = O. If the one-year interest rate is 5% and the two-year interest rate is 5.75%, then i1 is equal to: O A.6% O B. 5.75% O C. 5.50% O D. 5.25%What is the APR if the monthly rate of interest a credit card company charges on outstanding balances is 1.62%? Select one: O a. APR =(1.0162)^12) -1 = 0.2127, and APR = 21.27% O b. APR = ((1.0162)^7) - 1 = 0.1191, and APR = 11.91% O C. APR =((1.0162)^52) - 1 = 1.3063, and APR = 130.63%
- The approximate effective cost (EC) of financing the discount price of trade credit under terms 2/10, net/30 using a 360 day year is?If the annualized cost of the trade credit discount is 7.37%, what is the net trade credit period? Assume a discount percentage of 1% for payments received on or before 20 days. Select one: a. 20 days b. 30 days c. 50 days d. 70 daysGiven i(26) = 6.375 %, find the equivalent nominal interest rate compounded monthly. Question 2Answer a. 6.512% b. 6.448% C. 6.639% d. 6.767% e. 6.384%
- Given the following information, what is expected loss of a $200,000 loan in percent? Probability of default 0.30% Loss given default 55.00% A .15% B .22% C .33% D .17%Required: a. A firm currently offers terms of sale of 3/25, net 50. Calculate the effective annual rate. a-1. Calculate the effective annual rate if the terms are changed to 4/25, net 50. a-2. What effect does an increase in the discount rate have on the implicit interest rate charged to customers that pass up the discount? b-1. Calculate the effective annual rate if the terms are changed to 3/35, net 50. b-2. What effect does a decrease in the extra days of credit have on the implicit interest rate charged to customers that pass up the discount? c-1. Calculate the effective annual rate if the terms are changed to 3/25, net 40. c-2. Is there any difference between the implicit interest rate for terms of 3/35, net 50 and 3/25, net 40?True or False: PMI is usually charged at 0.5% to 1% of loan value. O True O False
- Calculate the nominal annual cost of no free trade credit under each of the following terms. Assume that payment is made either on the discount date or on the due date. a. 1/15, net 20 b. 2/10, net 60 c. 3/10, net 45 d. 2/10, net 45 e. 2/15, net 40The principal P is borrowed and the loan's future value A at time t is given. Determine the loan's simple interest rate r. P = $3800.00, A = $3885.50, t = 3 months S % (Round to the nearest tenth of a percent as needed.)What discount rate should a lender charge to earn an interest of 2 1/4 % on a 90-day loan? Hint: An interest rate r and discount rate d are said to be equivalent if these two simple rates give the same present value for an amount due in the future. Thus, r = d/(1 - dt) and d = r/(1 + rt)
