Question
You have loaned Mr. Brown $1,000 on the condition that he repay you in ten equal annual installments at 4% annual effective rate of interest.
You have loaned Mr. Brown $1,000 on the condition that he repay you in ten equal annual installments at 4% annual effective rate of interest.
The fifth installment is now due. You and Mr. Brown agree that for $525 in addition to the fifth installment, the loan will be paid off.
What is your yield rate under this arrangement?
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Financial Management Principles And Applications
Authors: Arthur J. Keown
9th Edition
013033362X, 9780130333629
