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A 10 year loan of 2,000 is repaid with payments the end of each year. There are 2 options: a. Equal annual payments at an annual effective rate of 8.07%; b. Installment of 200 each year plus interest on the outstanding balanc at an effective rate of i %. The sum of the payments under each option is the same. What is i?

A 10 year loan of 2,000 is repaid with payments the end of each year. There are 2 options: a. Equal annual payments at an annual effective rate of 8.07%; b. Installment of 200 each year plus interest on the outstanding balanc at an effective rate of i %. The sum of the payments under each option is the same. What is i?

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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7. A 10 year loan of 2,000 is repaid with payments the end of each year. There are 2 options: a. Equal annual payments at an annual effective rate of 8.07%; b. Installment of 200 each year plus interest on the outstanding balance at an effective rate of i %. The sum of the payments under each option is the same. What is i?
Transcribed Image Text:7. A 10 year loan of 2,000 is repaid with payments the end of each year. There are 2 options: a. Equal annual payments at an annual effective rate of 8.07%; b. Installment of 200 each year plus interest on the outstanding balance at an effective rate of i %. The sum of the payments under each option is the same. What is i?
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