Effective annual interest rate

Assignment Help Business Economics
Reference no: EM133067022

A local used car dealer calculates its "4%" financing as follows. If $3600 is borrowed to be repaid over a 3-year period, the interest charge is ($3600)(0.04)(3 years) = $432. The $432 of interest is deducted from the $3600 loan and the customer has $3168 toward the cost of a car. The customer must repay the loan with 1/36 of $3600, or $100, monthly payments for 36 months.

(a) What effective annual interest rate is being charged?

(b) What is your view of the ethics of this loan calculation? Do you believe deception is involved? In what circumstances do you view deception as ethical?

Reference no: EM133067022

Questions Cloud

Improvement and workflow automation : An essential tool in both process improvement and workflow automation is a process flow to understand the dynamics of how work is performed.
Alternatives using conventional benefit-cost analysis : The Highridge Water District needs an additional supply of water from Steep Creek. The engineer has selected two plans for comparison:
How should the company recognize its revenue : Assume the company cannot determine the percentage of completion reliably, how should the company recognize its revenue during year 2018
Find the optimal prices for company : A food company A produce one type of frozen fruits sold directly to consumers and ice-cream shops, and firm A has a marginal cost of $2. Firm A charges the two
Effective annual interest rate : A local used car dealer calculates its "4%" financing as follows. If $3600 is borrowed to be repaid over a 3-year period, the interest charge is ($3600)(0.04)(3
Real business value and staying power : Discuss how you can differentiate between a fly-by-night product or approach and one with real business value and staying power.
Maintain auto exhaust control devices : Does anyone have an incentive to maintain auto exhaust control devices in good working order? How can we ensure that they will be maintained?
Explain three distinct bases for strategic positioning : Explain three distinct bases for strategic positioning as proposed by Porter (1996)
Axon launches mobile app for body camera : "Axon Launches Mobile App for Body Camera with Remote Livestreaming and Critical Real-Time Alerts"

Reviews

Write a Review

Business Economics Questions & Answers

  Mean amount of coffee to be? dispensed

You can allow the cup to overfill 1?% of the time. What amount should you set as the mean amount of coffee to be? dispensed?

  Quantity demanded and quantity supplied in the global market

Suppose that advances in genetically modified crop technology enable farmers to produce greater amounts of agricultural products on the same amount of land. Explain how this event would affect demand, supply, price, quantity demanded, and quantity su..

  What is break-even quantity

You are considering opening a new business to sell sets of corn hole boards. You estimate that your manufacturing equipment will cost $100,000, facility updates

  Economic rent and the market for land

Consider the market for land in downtown Florence, a vibrant urban area with hundreds of years of rich history, as compared to the market for land in rural Tuscany, the surrounding countryside in central Italy. Some entrepreneurs decide to build park..

  What are required reserves and excess reserves

What are required reserves? What are excess reserves? Explain how the Fed can affect the quantity of excess reserves in the banking system. Explain why an individual bank can increase the money supply by the amount of its excess reserves, whereas the..

  Find the probability that in a random sample

Please assist me with the lay out to find the probability that in a random sample of 10 newborn babies the mean weight is more than 120.3 ounces.

  What will be the equation for the new supply curve

What will be the equation for the new supply curve once the subsidy is in place - what is the new equilibrium price for this good once the subsidy is in place?

  Techniques for calculating the value of the competitor

What are some of the valuation techniques for calculating the value of the competitor one intends to purchase?

  Determine the profit-maximizing amounts of electricity

Determine the profit-maximizing amounts of electricity to produce at the two facilities, the optimal price, and the utility company's profits.

  The cost to the government of buying firms unsold units

Consider a market where supply and demand are given by QXS = -16 + PX and QXd = 83 - 2PX. Suppose the government imposes a price floor of $40, and agrees to purchase any and all units consumers do not buy at the floor price of $40 per unit. Determine..

  An economy is in long-run macroeconomic equilibrium

An economy is in long-run macroeconomic equilibrium with an unemployment rate of 5% when the government passes a law requiring the central bank to use monetary policy to lower the unemployment rate to 3% and keep it there. How could the central bank ..

  Find the annual profit generated by light trucks

Find GM's profit maximizing output and price. Find the annual profit generated by light trucks

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd