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Memphic Memphic
wrote...
Posts: 728
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6 years ago
The effective monthly discount rate that you should use to evaluate the truck lease is closest to:
A) 0.487%
B) 0.498%
C) 1.500%
D) 1.535%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
Read 53 times
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Replies
wrote...
6 years ago
B
Explanation:  B) EAR = (1 + APR/k)k - 1 = (1 + .06/4)4 - 1 = .06136 or 6.14%
Monthly rate = (1 + EAR)(1/12) - 1 = (1.06136)(1/12) - 1 = .004975 = 0.498%
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