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Coverall Carpets Inc. is planning to borrow $12,000 from the bank. The bank offers the choice...

Coverall Carpets Inc. is planning to borrow $12,000 from the bank. The bank offers the choice of a 12 percent discount interest loan or a 10.19 percent add-on, 1-year installment loan, payable in 4 equal quarterly payments. What is the approximate (nominal) rate of interest on the 10.19 percent add-on loan?

Please label the terms that are in the formula so I can understand where the numbers come from thank you!

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Answer #1
Add on loan
Option-1
Loan 12000
Fixed interest rate 12%
Option-2
Add on loan 12000
Interest rate 10.19%
Principal to be repaid 3000 (12000/4)
Interest to be repaid 305.7 (12000*10.19%/4)
Total amount repaid every quarter 3305.7
Effective rate of interest 15.99% RATE(4,3305.7,-1000,,,)*4
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