The Jasmine Tea Company purchased merchandise from a supplier for $46,700. Payment was a noninterest-bearing note requiring Jasmine to make five annual payments of $12,000 beginning one year from the date of purchase. What is the interest rate implicit in this agreement?

Question

Business

Rhett Irwin

11 May, 14:57

The Jasmine Tea Company purchased merchandise from a supplier for $46,700. Payment was a noninterest-bearing note requiring Jasmine to make five annual payments of $12,000 beginning one year from the date of purchase. What is the interest rate implicit in this agreement?

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Answers (1)

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Hugo Norton · Answer 1

Implicit interest = 28.48%

Explanation:

Giving the following information:

The Jasmine Tea Company purchase merchandise from a supplier for $46,700.

Payment is five annual payments of $12,000 beginning one year from the date of purchase.

The total payment is = 12000*5 = $60000

Implicit interest = (60000/46700) - 1 = 28.48%