Harper Engine Company needs $684,000 to take a cash discount of 2.50/10, net 80. A banker will loan the money for 70 days at an interest cost of $15,400.

Question

asked Aug 12, 2021 186k views

1 Answer

Mike Chan · Answer 1 · 2021-08-17T13:51:08+0000

Answer: 11.58%

Step-by-step explanation:

Here is the remaining question:

What is the effective rate on the bank loan?

The effective interest rate would be calculated as:

= 15400/684000 × 360/70

= 0.1157895

= 11.58%