What is the effective annual rate of interest

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Reference no: EM131301974

1. The disposable income from your part-time job in 2012 and 2013 is $16,500. In 2012, you borrowed $900 at 18 percent interest. You repay your loan with interest in 2013. How much would you have available for spending in 2013?

2. You can buy an item for $100 on a charge with the promise to pay $100 in 90 days. Suppose you can buy an identical item for $94 cash. If you buy the item for $100, you are in effect paying $6 for the use of $94 for three months. What is the effective annual rate of interest? Ignore interest rate compounding. (Do not round your intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Reference no: EM131301974

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