# Sharon's new leather jacket: Time value of money and calculation of rate of interest.

Not what you're looking for?

Sharon buys a new leather jacket on credit. The cost of the jacket is $500 and has to be fully paid within 30 days.

But if she pays within 7 days she has to pay only $495.

Calculate the implicit annual rate of interest of the above transactions.

##### Purchase this Solution

##### Solution Summary

The solution shows all the calculations together with a good explanation of the time value of money as it relates to the cost of Sharon's new leather jacket.

##### Solution Preview

According to the concept of time value of money $1 today is more valuable than $1 tomorrow. Therefore we would delay our payment to the last day possible if we ...

##### Purchase this Solution

##### Free BrainMass Quizzes

##### Motivation

This tests some key elements of major motivation theories.

##### Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

##### Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

##### Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

##### Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.