Today is 1 January 2020. Jake just used $400,000 ($200,000 is from Jakes own investment and $200,000 is raised by taking a 5-year loan) to purchase a cafe franchise. To operate this business, Jake needs to pay rent, maintenance costs, labour costs and loan repayments.

Jake took a 5-year $200,000 loan from MQ bank. Jake needs to make 60 monthly repayment with an amount of $3,800. The loan repayment will be paid by the end of each month. This package has an annual fee of $200. The package fee is paid on 30 June of each year during the following five-year period. The first one will be paid on 30 June 2020. This loan will be fully repaid by the end of 5 years.

Rent will be paid by the end of each quarter with an amount of $12,000.

Labour cost will be paid by the end of each month with an amount of $10,000. Maintenance cost will be paid by the end of each half year with an amount of $15,000.

Jake predicts that this cafe franchise initially can have monthly revenue of $24,000. Assume that Jake can obtain this amount by the end of each month. Jake forecasts that this revenue amount will increase at the rate of 1.6% p.a. The revenue increase will only happen at the beginning of each year.

. The franchise has a term of 5 years. If Jake chooses not to renew the franchise, he needs to terminate this business by 31 December 2024.

Question: If Jake chooses not to renew the franchise, use the given information regarding costs and revenue to calculate Jakes effective yearly return rate (j1) over this five-year investment period.