Mary Jones recently obtained an equipment loan from a local bank. Theloan is for $15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must makemonthly payments on the loan, and the loan is to be repaid in 1 year. Whatis the effective annual rate on the loan (assuming a 365-day year)?
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Mary Jones recently obtained an equipment loan from a local bank. The
loan is for $15,000 with a nominal interest rate of 11%. However, this is an installment loan, so the bank also charges add-on interest. Mary must make
monthly payments on the loan, and the loan is to be repaid in 1 year. What
is the effective annual rate on the loan (assuming a 365-day year)?
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How would I calculate the nominal interest rate that is used in the effective annual rate equation by hand without using a financial calculator?
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