19) Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 12%, payable at maturity. (Note: Assume a 365-day year.)
a.How much interest (in dollars) will the firm pay on the 90-day loan?
b.Find the 90-day rate on the loan
c.Annualize your result in part b to find the effective annual rate for this loan, assuming that it is rolled over every 90 days throughout the year under the same terms and circumstances.
a.
Interest Paid = 10,000(0.12)(90/365)
Interest paid = $300
b.
Rate of 90-day = 0.12*90/365
Rate of 90-day = 2.96%
c.
Annualized Rate = (1.0296)^{365/90} - 1
Annualized Rate = 12.56%
19) Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 1...