The Omega Corp. plans to borrow $10,000 for a 60-day period. At maturity, - 4576

Solution Posted by
UoPExpert

UoPExpert

Rating : (2)F
Solution Detail
Price: $1.30
  • From: ,
  • Posted on: Wed 28 Mar, 2012
  • Request id: None
  • Purchased: 0 time(s)
  • Average Rating: No rating
Request Description

The Omega Corp. plans to borrow $10,000 for a 60-day period. At maturity, Omega will repay the $10,000 principal plus interest at an annual rate of 12%. What is the effective rate of interest on this loan?

a.12.62%

b.12.13%

c.11.47%

d.11.22%

The effective interest is determined by (1 + (12%/12)) 12 – 1 = 12.68%

 
Solution Description

The Omega Corp. plans to borrow $10,000 for a 60-day period. At maturity, Omega will repay the $10,000 principal plus interest at an annual rate of 12%. What is the effective rate of interest on this loan?