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9.2 #7 On January 1, 1978, Jonathan Linden is obligated to pay annual level payments for sixteen years, beginning with a payment on January 1,

9.2 #7

On January 1, 1978, Jonathan Linden is obligated to pay annual level payments for sixteen years, beginning with a payment on January 1, 1979. His financial advisor tells him that this liability has Macaulay duration 7.39. Determine the annual effective interest rate that the advisor used to figure the duration.

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Answer: 5.427914936%

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