Mindlap - Cengage Leaming X https//ng.cengage.com/static/nb/ui/evofindex.htmi?de

ID: 2809540 • Letter: M

Question

Mindlap - Cengage Leaming X https//ng.cengage.com/static/nb/ui/evofindex.htmi?deploymentld-551651215053483539471157998keISBN 97 Bookshelf Online, Us CengageBran Booksi Amazoncome Rhapsc MINDTAP m Cenga e 2 Homework Click here to read the eBook: Finding the Interest Rate, I Click here to read the eBook: Comparing Interest Rates EFFECTIVE RATE OF INTEREST OFind the interest rates earned on each of the following. Round each answer to two decimal places. O a. You borrow $680 and promise to pay back $748 at the end of 1 year. 0 b. You lend $680 and the borrower promises to pay you $748 at the end of 1 year. 3% O C.You borrow $80,000 and promise to pay back $212,676 at the end of 8 years. 13 O d. You borrow $18,000 and promise to make payments of $4,390.00 at the end of each year for 5 years. 3 Hide Feedback Partially Correct pe here to search

Explanation / Answer

Interest rate = Pay/Borrow -1 = (748/680)-1 = 10.00%

Interest rate = Pay/lend -1 = (748/680)-1 = 10.00%

Interest rate = (Pay/Borrow)^(1/Years) -1 = (212676/80000)^(1/8)-1 = 13.00%

Interest rate = 7.00%

Using financial calculator BA II Plus - Input details:

FV = Future Value / Face Value =

$0.00

PV = Present Value =

$18,000.00

N = Number of years =

PMT = Payment =

-$4,390.00

CPT > I/Y = Rate =

6.999724

Rate annual = Rate / 100 =

7.00%

Note: Part b is lending case, I am bit confused on answering guidelines, it can also be ne negative value. But first try putting 10.00% (positive value)