What is the effective annual rate of interest


Atlas Tire Irons, Inc. is considering borrowing $5,000 for a 90-day period. The firm will repay the $5,000 principal amount plus $150 in interest. What is the effective annual rate of interest? Use a 360-day year.

i) 7%
ii) 12%
iii) 15%
iv) 25%

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Finance Basics: What is the effective annual rate of interest
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