The effective annualized cost (%) of a banker’s acceptance that has an all-inclusive annual rate of 5.25% for a one-month loan of $2,000,000 is closest to :
A) 5.27
b) 5.38
c) 5.54
it said the asnwer is A. Interst/Net proceeds x12 = 2,000,000 x .0525 x 12/ 2,000,000 x (1-0.0525 x 1/12) x 12 = .0527
i did the math out and ended up getting a different answer. Is this the correct way to do it?
A) 5.27
b) 5.38
c) 5.54
it said the asnwer is A. Interst/Net proceeds x12 = 2,000,000 x .0525 x 12/ 2,000,000 x (1-0.0525 x 1/12) x 12 = .0527
i did the math out and ended up getting a different answer. Is this the correct way to do it?