You borrow $10,000 from a bank, to be repaid in 5 equal annual installments
Question # 00622239
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Updated on: 11/27/2017 06:10 AM Due on: 11/27/2017
(a) You borrow $10,000 from a bank, to be repaid in 5 equal annual installments of $2,200 starting one year from now. What is the implied interest rate that the bank is charging?
(b) You borrow $10,000 from a bank, to be repaid in 10 equal semi-annual installments of $1,100 starting six months from now. What is the effective annual interest rate charged by the bank?
(c) You borrow $10,000 from a bank, to be repaid in 5 equal annual installments of $2,300 staring 3 years from now. What is the effective annual interest rate charged by the bank?
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Solution: You borrow $10,000 from a bank, to be repaid in 5 equal annual installments