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Author Question: Your need to repay a loan with a future value of 304,071.00 in 18.5 years. If you can make annual ... (Read 127 times)

lindiwe

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on: Jul 10, 2018
Your need to repay a loan with a future value of 304,071.00 in 18.5 years. If you can make annual year-end deposits of 11,000 into an account, what annual rate of return would you require to earn enough money to pay the loan in full at the due date?
 
  A) 7.92
  B) 8.73
  C) 4.16
  D) 4.39

Question 2

Solving for an unknown interest rate for annuity cash flows is an iterative (or trial-and-error) process.
 
  Indicate whether the statement is true or false.


olivia_paige29

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: D
Explanation: D) This is an iterative process (trial and error). Solve using the RATE function in Excel.
MODE = END
INPUT 18.5 ? 0 11,000 -304,071
KEY N I/Y PV PMT FV
CPT 4.39

Answer to Question 2

Answer: TRUE


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