The Miro Company needs to purchase some office equipment on February 1. The company is short of cash and expects to be short for the several months. The treasurer has said that he could pay for equipment as follows.
|
April 1
|
$150
|
|
June 1
|
$300
|
|
Aug 1
|
$450
|
|
Oct 1
|
$600
|
|
Dec 1
|
$750
|
A local office supply firm will agree to sell the equipment to Miro now and accept payment according to the treasurer's schedule. If interest will be charged at 3% every 2 months, with compounding once every 2 months, explain how much office equipment can Miro Company buy now? Determine the effective interest rate?