What is the effective interest rate

Assignment Help Business Economics

Reference no: EM13737194

On February 1, the Miro Company needs to purchase some office equipment. The company is short of cash and expects to be short for several months. The treasurer has said that he could pay for the equipment as follows. April 1 $150 June 1 $300 Aug 1 $450 Oct 1 $600 Dec 1 $750 A local office supply firm will agree to sell the equipment to Miro now and accept payment according to the treasurer’s schedule. If interest will be charged at 3% every 2 months, with compounding once every 2 months, how much office equipment can the Miro Company buy now? What is the effective interest rate?

Reference no: EM13737194

Questions Cloud

Suppose the actual rgdp for the us economy : Suppose the actual RGDP for the US economy in Y2003 and in Y2004 are respectively $10,580.7 billion and $10, 994.3 billion. Estimate the growth rate of RGDP in percentage terms between these two years. (Hint Growth rate = (Yt- Yt-1)/Yt-1 *100).

Unemployment rates on the balance of bargaining power : Explain why the Aggregate Supply curve becomes increasingly steeply sloped at levels of RGDP near "full employment" and becomes especially steeply sloped beyond "full employment" RGDP. Why might the rate at which the Aggregate Supply curve shifts ver..

What are excess cash reserves : Although the central banker didn't say so, this may ultimately compel him to resort increasingly to managing the money supply by managing banks' excess cash reserves-the stuff from which banks create loans. What are excess cash reserves? Why are the..

What is the present worth of the van : Delta Dawn’s Bakery is considering purchasing a new van to deliver bread. The van will cost $21,500. Two-thirds ($14,333) of this cost will be borrowed. The loan is to be repaid with four equal annual payments (first payment at t = 1) based on an int..

What is the effective interest rate : On February 1, the Miro Company needs to purchase some office equipment. The company is short of cash and expects to be short for several months. The treasurer has said that he could pay for the equipment as follows.

What is the present worth of this investment : Aerotron Electronics is considering purchasing a water filtration system to assist in circuit board manufacturing. The system costs $42,000. It has an expected life of 7 years at which time its salvage value will be $8,500. Operating and maintenance ..

How does the fed take money out of the banking system : The Federal Reserve took money out of the banking system to raise the federal funds rate-the rate at which banks lend each other money overnight-from 4 percent to 4.5 percent. How does the Fed take money out of the banking system? Explain how doing s..

Increase in demand and increase in quantity demanded : What is the difference between an "increase in demand" and an "increase in quantity demanded" -Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are

Identification and reasoning of the theory : An analysis, identification, and reasoning of the theory that relates to this scenario. A description of how the framing process could affect this situation and whether things have turned around to the positive side.

User Account

All Pages