ireneyi
Feb 27, 2011, 09:13 AM
Ryan wishes to borrow 10000.Meade and Halliday offer to lend the money with following term:
Meade would be repaid with 10 equal annual payment made at the end of each year at 8% interest effective annually.
Halliday charges an annual effective interest rate of I with Ryan accumulating the amount necessary to repay the loan by means of 10 annual deposits at the end of each year into sinking fund earning 7% interest effective annually.
The total payment(principal and interest) is same for Maede and Halliday.
Calculate I.
Meade would be repaid with 10 equal annual payment made at the end of each year at 8% interest effective annually.
Halliday charges an annual effective interest rate of I with Ryan accumulating the amount necessary to repay the loan by means of 10 annual deposits at the end of each year into sinking fund earning 7% interest effective annually.
The total payment(principal and interest) is same for Maede and Halliday.
Calculate I.