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7-56 An engineering firm can pay for its liability insurance on an annual or monthly...

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Finance

7-56 An engineering firm can pay for its liability insurance on an annual or monthly basis. If paid monthly, the insurance costs $4500. If paid annually, the insurance costs $50,000. What are the monthly rate of return and the nominal and effective interest rates for paying on an annual basis?

ANS = 18.6%

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