Illustrate what is the effective annual interest rate

Assignment Help Financial Accounting

Reference no: EM13120806

You are the office manager of the Orthopedic Sports Clinic.Your physicians would like to purchase a piece of equipment that will cost the practice $100,000.You can purchase the equipment through the dealer's finance company over time and it will cost an additional $12,000 in interest.

A.What is the effective annual interest rate you will be paying using each of the following methods?
1.Simple Interest
2.Discount Interest
3.Add-On Interest

B.If the dealer's finance company requires you to repay the principal and interest in monthly installments, would it be better to finance the equipment at your local bank which is offering a 15% interest rate?Explain your answer.

Reference no: EM13120806

Questions Cloud

What is the new pressure of the gas : A 706 mL gas sample at STP is compressed to a volume of 248 mL, and the temperature is increased to 39?C. What is the new pressure of the gas in Pa.

Discussion of the feasibility of the project : Prepare a summary cash budget for the year, showing any borrowing and repayment of debt with interest. Discuss Big Als ability to repay the expansion loan. Include a discussion of the feasibility of the project. Include qualitative factors to be c..

Probability of service process selection and design : Probability of Service Process selection and Design, Students arrive at the Administrative Services Office at an average of one every 15 minutes, and their requests take on average 10 minutes to be processed.

Prepare a chronological list of the investments cash : Compute the investment's net present value, rounding calculations to the nearest dollar.

Illustrate what is the effective annual interest rate : You can purchase the equipment through the dealer's finance company over time and it will cost an additional $12,000 in interest. Illustrate what is the effective annual interest rate you will be paying using each of the following methods?

How many moles of which reactant remain unused : if 7.o moles of sulfur atoms and 10 moles of oxygen molecules are combined to form the maximum amount of sulfur trioxide, how many moles of which reactant remain unused at the end.

Find probability for poisson random variable : Probability for Poisson Random Variable, During summer weekdays, boats arrive at the inlet drawbridge according to the Poisson distribution at a rate of 3 per hour

Discuss the rationale that underlies managements belief : New equipment is available that will reduce annual cash operating costs to $21,000. The equipment costs $103,000, has a service life of six years, and has an estimated residual value of $13,000. Company sales will total $430,000 per year with eith..

Calculate the pka for the acid : Enough of a monoprotic acid is dissolved in water to produce a 0.0142 M solution. The pH of the resulting solution is 2.51. Calculate the pKa for the acid

User Account

All Pages