If a firm borrowed $500,000 at a rate of 10% simple interest with monthly interestpayments and a 365-day year, what would be the required interest payment for a30-day month? If interest must be paid monthly, what would be the effective annualrate?

If a firm borrowed $500,000 at a rate of 10% simple interest with monthly interestpayments and a 365-day year, what would be the required interest payment for a30-day month? If interest must be paid monthly, what would be the effective annualrate?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 14P

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Question

If a firm borrowed $500,000 at a rate of 10% simple interest with monthly interest
payments and a 365-day year, what would be the required interest payment for a
30-day month? If interest must be paid monthly, what would be the effective annual
rate?

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