If you borrow S20 000 as a five-year loan from the bank and the bank requires you to make end-of-year payments of $4878.05, what is the annual interest rate on this loan if interest is compounded annually (rounded to the nearest percent)? a. 8 percent b. 6 percent c. 7 percent d. 4 percent

If you borrow S20 000 as a five-year loan from the bank and the bank requires you to make end-of-year payments of $4878.05, what is the annual interest rate on this loan if interest is compounded annually (rounded to the nearest percent)? a. 8 percent b. 6 percent c. 7 percent d. 4 percent

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Answer is c: 7 percent rounded from 6.98%

I used calculator to get answer, but would like to solve it using formula

Thank you!

If you borrow S20 000 as a five-year loan from the
bank and the bank requires you to make end-of-year
payments of $4878.05, what is the annual interest
rate on this loan if interest is compounded annually
(rounded to the nearest percent)?
a. 8 percent
b. 6 percent
c. 7 percent
d. 4 percent

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