23.) Charming Charlies charges a daily rate of 0.03 percent (.03% or .0003) on its store...

23.)

Charming Charlies charges a daily rate of 0.03 percent (.03% or .0003) on its store credit cards. What interest rate is the company required by law to report to potential customers?

Charming Charlies charges a daily rate of 0.03 percent (.03% or .0003) on its store credit cards. What is the effective annual rate it charges its customers?

Curtis Builders is borrowing $150,000 today for 5 years. The loan is an interest-only loan with an APR of 9.5 percent. Payments are to be made annually. What is the amount of the first annual payment?

Solutions

Expert Solution

Charming Charlies charges a daily rate of 0.03 percent (.03% or .0003) on its store credit cards. What interest rate is the company required by law to report to potential customers?

The company is required to report an Annual Percentage Rate (APR) to its potential customers.

APR = 0.0003 * 365 = 0.1095

APR = 10.95%

Charming Charlies charges a daily rate of 0.03 percent (.03% or .0003) on its store credit cards. What is the effective annual rate it charges its customers?

EAR = (1 + 0.0003)^365 - 1

EAR = 0.115701749

EAR = 11.5701749%

The amount of the first annual payment = Loan amount * Interest rate

The amount of the first annual payment = 150,000 * 0.095

The amount of the first annual payment = $14,250

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

What is the effective annual rate if a firm charges you 7.75 percent, compounded daily, based...

What is the effective annual rate if a firm charges you 7.75 percent, compounded daily, based on a 360-day year?

Bank A charges 12% compounded monthly on its business loan. BankB charges 11.5% compounded daily....

Bank A charges 12% compounded monthly on its business loan. Bank B charges 11.5% compounded daily. Bank C charges 11% compounded continuously. If you want to borrow money that you will return after a number of years, which bank would you choose? Justify your answer.

Suppose that in the Solow growth model the saving rate is 30 percent (s=0.03), population growth...

Suppose that in the Solow growth model the saving rate is 30 percent (s=0.03), population growth rate is 2 percent (n=0.02), depreciation rate is 8 percent (d=0.08), and production fuction is F(K,N)=zK^0.4N^0.6. a) Suppose that z=2. What is the steady state level of captial per worker and consumption per worker? b) What is the level of golden rule savings and golden rule capital stock? At the golden rule capital stock, what is the level of consumption per worker? c) Suppose...

A Bigbank Visa card charges interest at a nominal rate of 24% per year, compounded daily....

A Bigbank Visa card charges interest at a nominal rate of 24% per year, compounded daily. If a person has an outstanding balance of $500 on this card, (i) What will be the balance after 1 week, 30 days, 120 days and 365 days, if he makes no payments in the interim? (ii) What is the growth factor over 1 day, 1 week, 30 days and 1 year of his debt? (iii) What is the APR of this card? (iv)...

Use the following information for Taco Swell, Inc., (assume the tax rate is 23 percent): ...

Use the following information for Taco Swell, Inc., (assume the tax rate is 23 percent): 2017 2018 Sales $ 17,073 $ 16,236 Depreciation 1,771 1,846 Cost of goods sold 4,529 4,817 Other expenses 1,001 879 Interest 850 981 Cash 6,232 6,796 Accounts receivable 8,150 9,757 Short-term notes payable 1,280 1,257 Long-term debt 20,650 24,911 Net fixed assets 51,130 54,603 Accounts payable 4,560 4,974 Inventory 14,470 15,398 Dividends 1,500 1,728 Prepare a balance sheet for this company for 2017...

Problem 18-03 The federal corporate income tax rate is 35 percent and firms may carry-back losses...

Problem 18-03 The federal corporate income tax rate is 35 percent and firms may carry-back losses for two years and carry-forward losses for 20 years. The carry-back must occur before carry-forward. A corporation breaks even in year 1, earns $27,000 in year 2, but operates at a loss of $87,000 in year 3. It earns $73,000 in year 4, breaks even in year 5, and earns $43,000 in year 6. What are the taxes paid or refunded in each year?...

Ricky Ripov’s Pawn Shop charges an interest rate of 16.75 percent per month on loans to...

Ricky Ripov’s Pawn Shop charges an interest rate of 16.75 percent per month on loans to its customers. Like all lenders, Ricky must report an APR to consumers. a. What rate should the shop report? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the effective annual rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Big Dom’s Pawn Shop charges an interest rate of 26.7 percent per month on loans to...

Big Dom’s Pawn Shop charges an interest rate of 26.7 percent per month on loans to its customers. Like all lenders, Big Dom must report an APR to consumers. What rate should the shop report? (Do not round intermediate calcualtions. Enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) APR % What is the effective annual rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) EAR...

Mr. Miser loans money at an annual rate of 20 percent. Interestis compounded daily. What...

Mr. Miser loans money at an annual rate of 20 percent. Interest is compounded daily. What is the actual rate Mr. Miser is charging on his loans?

If you invest $22,267 today at an interest rate of 9.98 percent, compounded daily, how much...

If you invest $22,267 today at an interest rate of 9.98 percent, compounded daily, how much money will you have in your savings account in 21 years?

Subjects