What is effective rate of interest

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Reference no: EM131891509

1. Price Corp. is considering selling to a group of new customers and creating new annual sales of $50,000. It is estimated that 5% of these new sales will be uncollectible. The collection cost on these accounts is 3.5%, the cost of producing and selling is 80% of sales, and the firm is in the 30% tax bracket. If the only new investment will be an increase in accounts receivable and the company has a receivables turnover of 4, what can Price Corp. expect as an incremental return on investment? Select one: A. 60.37% B. 46.44% C. 32.20% D. 11.52%

2. Von Hayek's Kayaks can borrow $10,000 for 60 days at a cost of $200 interest. What is the effective rate of interest?

A. 9.90%

B. 10.50%

C. 11.50%

D. 12.00%

Reference no: EM131891509

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