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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Sept/dec 2015 q2) armstrong
In part b we need to calculate the effective interest rate, how is it calculated?
You take the net receipt and divide by the amount of the loan (€25M). Because the loan is for 6 months, this would be the effective interest for 6 months, so to make it an annual rate you multiply by 2.
(This is explained in detail in our free lectures on interest rate risk management)
Thank you
You are welcome 🙂