Asked by Academic Research on Apr 29, 2024
Verified
A finance company paid a furniture retailer $1050 for a conditional sale contract requiring 12 end-of-month payments of $100. What effective rate of return will the finance company realize on the purchase?
Effective Rate
The actual interest rate an investor receives or pays after the effects of compounding interest and all charges are considered.
End-Of-Month Payments
Payments that are due at the end of each month, commonly found in loan and lease agreements.
Finance Company
A business that provides loans to individuals or other businesses and generates profit from the interest on these loans.
- Assess nominal and effective interest rates for normal annuities.
Verified Answer
ZK
Learning Objectives
- Assess nominal and effective interest rates for normal annuities.