What would be the interest rate on a loan of $39,927.10 that you paid off with annual payments of $10,000 for each of the next five years?
A)8%
B)10%
C)15%
D)21%
E)26%

Question

Quizplus · Accepted Answer

The interest rate that fits the given conditions is 8%. This can be determined by using the present value formula for annuities or a financial calculator to solve for the interest rate that makes the present value of the annuity payments ($10,000 annually for 5 years) equal to the loan amount ($39,927.10).

What Would Be the Interest Rate on a Loan of $39,927.10