Calculating the effective annual interest rate
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If you barrow $4,000 at $500 interest for one year, What is your effective interest rate for the following payment plans?
a. Annual payment.
b. Semiannual payment.
c. Quarterly payment.
d. Monthly payment.
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Solution Summary
Solution describes the steps to calculate effective interest rate in the given cases.
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If you barrow $4,000 at $500 interest for one year, What is your effective interest rate for the following payment plans?
a. Annual payment.
Annual number of payments=1
Interest=$500
Total number of payments=1
Principal=$4000
Effective interest rate=(2*Annual number of ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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