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with respect to each of the three $7,000 loans is shown in the following table. Each loan requires John to make one payment at the end of each year. a. Determine the interest rate associated with each of the loans. b. Which loan should John take?

with respect to each of the three $7,000 loans is shown in the following table. Each loan requires John to make one payment at the end of each year. a. Determine the interest rate associated with each of the loans. b. Which loan should John take?

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 94PSB
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Loan A B с Principal $7,000 $7,000 $7,000 Annual payment $2,914.24 $2,256.61 $1,846.48 Term (years) 3 345 4
Transcribed Image Text:Loan A B с Principal $7,000 $7,000 $7,000 Annual payment $2,914.24 $2,256.61 $1,846.48 Term (years) 3 345 4
Loan rates of interest Personal Finance Problem John Flemming has been shopping for a loan to finance the purchase of a used car. He has found three possibilities that seem attractive and wishes to select the one with the lowest interest rate. The information available with respect to each of the three $7,000 loans is shown in the following table,Each loan requires John to make one payment at the end of each year. a. Determine the interest rate associated with each of the loans. b. Which loan should John take? a. The interest rate, r, on loan A is %. (Round to the nearest whole percent.) (…)
Transcribed Image Text:Loan rates of interest Personal Finance Problem John Flemming has been shopping for a loan to finance the purchase of a used car. He has found three possibilities that seem attractive and wishes to select the one with the lowest interest rate. The information available with respect to each of the three $7,000 loans is shown in the following table,Each loan requires John to make one payment at the end of each year. a. Determine the interest rate associated with each of the loans. b. Which loan should John take? a. The interest rate, r, on loan A is %. (Round to the nearest whole percent.) (…)
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We need to calculate interest rate on loan by using RATE function in excel. The lowest rate would be preferred for loan.

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