Problem 2:Sara ,manager of Littman Jewellers, want to sell on credit giving customers 3 months to pay. However Sara has to borrow from her bank to provide financing to customers. The bank will charge an APR of 12% that will be compounded monthly. She quotes an APR to customers based on the effective quarterly rate that will exactly cover hers financing cost.
1. what is effective quarterly rate ?
2.what is the APR Sara should quote to the customers?
3.What is this effective annual rate?
