local finance company quotes a 17% interest rate on one-year loans. So, d you borrow $25.000, the interest for the year will be $4,250 Since you must repay a total of $29.250 in one year, the finance company requires you to pay $29.250/2. or $243250, per month over the next 12 months. Is this a 17% loan? What rate would legally have to be quoted? (De net reund intermediate calculations. Round the final answer to 2 decimal places) Annual percentage rate What is the effective annual rate? (De not round intermediate calculations. Round the final answer to 2 decimal places) ffective annual rate
local finance company quotes a 17% interest rate on one-year loans. So, d you borrow $25.000, the interest for the year will be $4,250 Since you must repay a total of $29.250 in one year, the finance company requires you to pay $29.250/2. or $243250, per month over the next 12 months. Is this a 17% loan? What rate would legally have to be quoted? (De net reund intermediate calculations. Round the final answer to 2 decimal places) Annual percentage rate What is the effective annual rate? (De not round intermediate calculations. Round the final answer to 2 decimal places) ffective annual rate
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 19P
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Question
![A local finance company quotes a 17% Interest rate on one-year loans. So, if you borrow $25.000, the interest for the year will be
$4,250. Since you must repay a total of $29.250 in one year, the finance company requires you to pay $29,250/12, or $2.43750, per
month over the next 12 months. Is this a 17% loan?
What rate would legally have to be quoted? (Do not round intermediate calculations. Round the final answer to 2 decimal places)
Annual percentage rate
1%
What is the effective annual rate? (De not round intermediate calculations. Round the final answer to 2 decimal places)
Effective annual rate](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fef1df39d-437b-4a69-8d4c-44f8f52c2fd0%2F0b92696d-11d7-4116-bbb9-befc46ad1797%2Fiplk9qb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A local finance company quotes a 17% Interest rate on one-year loans. So, if you borrow $25.000, the interest for the year will be
$4,250. Since you must repay a total of $29.250 in one year, the finance company requires you to pay $29,250/12, or $2.43750, per
month over the next 12 months. Is this a 17% loan?
What rate would legally have to be quoted? (Do not round intermediate calculations. Round the final answer to 2 decimal places)
Annual percentage rate
1%
What is the effective annual rate? (De not round intermediate calculations. Round the final answer to 2 decimal places)
Effective annual rate
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