please show detail working Question 4 NOMINAL INTEREST RATE AND EXTENDING CREDIT...
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Question 4
NOMINAL INTEREST RATE AND EXTENDING CREDIT
As a jewelry store manager, you want to offer credit, with interest on outstanding balances paid monthly. To carry receivables, you must borrow funds from your bank at a nominal 6%, monthly compounding. To offset your overhead, you want to charge your customers an EIR that is 2% more than the bank is charging you.
What annual interest rate should you change your customers? [3 marks]
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