What nominal and effective rates

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Reference no: EM13748066

Anita Moola borrows $5000 from the Shark Loan Company to pay her college expenses for the semester. She must repay the loan in six $1000 end–of-month payments over the next ½ year. Determine the interest rate that she is being charged per month (to the nearest 0.1%). What nominal and effective rates is she being charged (to the nearest 0.1%)?

a. Draw the Cash Flow Diagram (neatly – with a straight edge; and label all values, and time increments). Or, you may draw this using EXCEL.

b. Determine:

1. Interest rate per month

2. Nominal interest rate

3. Effective interest rate

c. Write instructions and show an example that explains how to interpolate between the interest values of 5% and 6% in part b above using the INTERPOLATE function in EXCEL.

Reference no: EM13748066

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