Question

Jake borrowed $18,000 from his father to purchase a camper. Jake paid back $25,000 to his father at the end of 6 years. What was the average annual compound rate of interest on Jake's loan from his father

Answer 1

Answer:

5.63%

Explanation:

The annual compound rate of interest on Jake's loan from his father is calculated as :

PV = $18,000

N = 6

P/yr = 1

Pmt = $ 0

FV = - $25,000

i = ?

Using a financial calculator to input the values as shown above, the annual compound rate of interest is 5.6277 % or 5.63%