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
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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.
