Question
On 1/1/87, Cathy borrows $1,000 from ABS Finance Company and agrees to repay it in five annual installments at an effective annual rate of 11%.
On 1/1/87, Cathy borrows $1,000 from ABS Finance Company and agrees to repay it in five annual installments at an effective annual rate of 11%.
The first payment is due one year after the loan is issued. On 1/1/89, Cathy pays off the loan balance plus a $50 prepayment penalty.
Find the effective overall rate of return of ABC .
Step by Step Solution
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Step: 1
To find the effective overall rate of return of the loan we need to calculate the total amount repai...
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Intermediate Accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
6th edition
978-0077328894, 71313974, 9780077395810, 77328892, 9780071313971, 77395816, 978-0077400163
