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Your business manufactures a component for an OEM customer who pays you every quarter for your products. You must borrow $3.5 million to expand your warehouse. You arrange to borrow the money from the bank at 8% APR compounded monthly. You arrange your 5-year loan contract so you can make quarterly payments to coincide with your receipts from your customer.

(a) What is the effective annual interest rate the bank is charging with 8% APR compounded monthly?

(b) What is your quarterly payment?

(c) What is the effective annual interest you are paying with your quarterly payment?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9499388

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