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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?

User Erosb
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1 Answer

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Answer:

Implicit interest= 28.48%

Step-by-step 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%

User MaheshVarma
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