question archive At the Central Furniture Company, customers who buy on credit pay an effective annual interest rate of 16
At the Central Furniture Company, customers who buy on credit pay an effective annual interest rate of 16
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At the Central Furniture Company, customers who buy on credit pay an effective annual interest rate of 16.1%, based on monthly compounding, what is the nominal annual interest rate that they pay?
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Answer:
(1+r/12)^12=1.161, and solve for r.
12 ln(1+r/12)= ln(1.161).
ln(1+r/12)=.0124401.
1+r/12=e^(.0124401)=1.0125178.
r=15.02%.
