Sheryl Tran pays $245 at the end of each month for ten years in order to repay a loan of $22,000. The lender makes level deposits to a sinking fund account that is held by a third party and that pays an annual effective interest rate of 3% during the first four years and a nominal monthly discount rate of 4% there after. Find the difference between the annual effective interest rate charged to Ms. Tran and the lender's annual yield.

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
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Sheryl Tran pays $245 at the end of each month for ten years in order to repay a loan of $22,000. The lender makes
level deposits to a sinking fund account that is held by a third party and that pays an annual effective interest rate of 3%
during the first four years and a nominal monthly discount rate of 4% there after. Find the difference between the
annual effective interest rate charged to Ms. Tran and the lender's annual yield.
Transcribed Image Text:Sheryl Tran pays $245 at the end of each month for ten years in order to repay a loan of $22,000. The lender makes level deposits to a sinking fund account that is held by a third party and that pays an annual effective interest rate of 3% during the first four years and a nominal monthly discount rate of 4% there after. Find the difference between the annual effective interest rate charged to Ms. Tran and the lender's annual yield.
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