SOLUTION: If you borrow $20 000 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 interes

Question 1176225: If you borrow $20 000 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?
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
the loan is for 20,000.
the term is 5 years compounded annually.
the end of year payments are 4878.05.

the annual interest rate is 7.001808%.

here's a display from the calculator i used.

your inputs are:

pv = 20,000
fv = 0
np = 5 years
pmt = -4878.05
payment at end of each year

click on ir and the calculator talls you that the interest rate is 7.001808% per year.

this calculator can be found at https://arachnoid.com/finance/index.html

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