Brian borrowed a sum of $5,000 from his rich uncle Bill. After three years, Brian paid a sum of $4,000 towards the accumulated interest and partial principal. He also paid a sum of $2,500 at the end of five years to pay off the loan. The interest rates quoted by the rich uncle were two-tiered. The interest rate for the first three years was 6% compounded yearly and a slightly higher rate for years four and five. This interest rate was nearly equal to _____________.
Brian borrowed a sum of $5,000 from his rich uncle Bill. After three years, Brian paid a sum of $4,000 towards the accumulated interest and partial principal. He also paid a sum of $2,500 at the end of five years to pay off the loan. The interest rates quoted by the rich uncle were two-tiered. The interest rate for the first three years was 6% compounded yearly and a slightly higher rate for years four and five. This interest rate was nearly equal to _____________.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Brian borrowed a sum of $5,000 from his rich uncle Bill. After three years, Brian paid a sum of $4,000 towards the accumulated interest and partial principal. He also paid a sum of $2,500 at the end of five years to pay off the loan. The interest rates quoted by the rich uncle were two-tiered. The interest rate for the first three years was 6% compounded yearly and a slightly higher rate for years four and five. This interest rate was nearly equal to _____________.
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