Company ABC is offered a 1-year loan of $50,000 from Bank DEF. The nominal interest rate is 12%p.a. and interest is to be paid at the beginning of the loan.   Question 17 options:   1)  The effective interest rate of the loan will be 12.00%p.a.   2)  The effective interest rate of the loan will be 10.71%p.a.   3)  The effective interest rate of the loan will be 13.64%p.a.   4)  There is insufficient information to determine the effective interest rate.

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
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Company ABC is offered a 1-year loan of $50,000 from Bank DEF. The nominal interest rate is 12%p.a. and interest is to be paid at the beginning of the loan.
 

Question 17 options:

 

1) 

The effective interest rate of the loan will be 12.00%p.a.
 

2) 

The effective interest rate of the loan will be 10.71%p.a.
 

3) 

The effective interest rate of the loan will be 13.64%p.a.
 

4) 

There is insufficient information to determine the effective interest rate.
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