the yearly effective rate over the five-year period?

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
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You are given a loan payable in five years and on which interest is charged over the five-year
period, as follows:
First year: an effective rate of discount of 6%
Second year: a nominal rate of discount of 7% compounded every 2 years
Third year: a nominal rate of interest of 5% compounded semi-annually
Fourth and fifth year: A force of interest of 7%
What is the yearly effective rate over the five-year period?

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