Question
On January 15, 2000, Enterprise A loans $6,000 to Enterprise B and $17,000 to Enterprise C. Enterprise B repays Enterprise A $7,000 on January 15,
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On January 15, 2000, Enterprise A loans $6,000 to Enterprise B and $17,000 to Enterprise C. Enterprise B repays Enterprise A $7,000 on January 15, 2002 and this money is reinvested at a 5% annual effective rate. Enterprise C repays Enterprise A $22,500 on January 15, 2004. What is the annual yield received by Enterprise A over the four-year interval. Compare it to the annual effective interest rates paid by Enterprises B and C.
correct answer: iA=7.06134%, iB=8.01234%, iC=7.25891%
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Analysis For Financial Management
Authors: Robert C. Higgins
10th International Edition
007108648X, 9780071086486
