The Stony River Textiles Company will borrow $50 million for 180 days from Merrimac Bank.The bank will charge Stony River 4.5 % on a discounted basis.What is the annual percentage rate (APR)to Stony River (round to the nearest .1 percent)?

Question

Quizplus · Accepted Answer

The APR for a discounted loan is calculated using the formula: APR = (Discount Rate / (1 - Discount Rate)) * (360 / Loan Term). Here, the discount rate is 4.5%, and the loan term is 180 days. Plugging in the values, APR = (0.045 / (1 - 0.045)) * (360 / 180) = 4.71%.

The Stony River Textiles Company Will Borrow $50 Million for 180