The monthly discount rate that you should use to evaluate the truck lease is closest to:
A)0.487%
B)0.512%
C)0.498%
D)0.500%
E)0.504%

Question

Quizplus · Accepted Answer

To calculate the monthly discount rate, we need to divide the annual discount rate by 12. Using the given formula, we get:

Monthly discount rate = (1 + Annual discount rate)^(1/12) - 1

Plugging in the values, we get:

Monthly discount rate = (1 + 6%)^(1/12) - 1
= 1.06^(1/12) - 1
= 0.498%

Therefore, the closest monthly discount rate is option C) 0.498%.

The Monthly Discount Rate That You Should Use to Evaluate