A loan of $5,000 can be repaid by payments of $117.38 at the end of each month for n years (that is, 12n payments), starting one month after the loan is made. At the same rate of interest, 12n monthly payments of $113.40 each accumulate to $10,000 one month after the final payment. Find the equivalent effective annual rate of interest.

A loan of $5,000 can be repaid by payments of $117.38 at the end of each month for n years (that is, 12n payments), starting one month after the loan is made. At the same rate of interest, 12n monthly payments of $113.40 each accumulate to $10,000 one month after the final payment. Find the equivalent effective annual rate of interest.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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