April borrows $20000 at an interest rate of 7% to purchase a new automobile. At what rate (in dollars per year) must she pay back the loan, if the loan must be paid off in 5 years? (Use decimal notation. Give your answer to two decimal places.) withdrawal rate: $ per year

April borrows $20000 at an interest rate of 7% to purchase a new automobile. At what rate (in dollars per year) must she pay back the loan, if the loan must be paid off in 5 years? (Use decimal notation. Give your answer to two decimal places.) withdrawal rate: $ per year

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 13E

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

April borrows $20000 at an interest rate of 7% to purchase a new automobile. At what rate (in dollars per year) must she
pay back the loan, if the loan must be paid off in 5 years?
(Use decimal notation. Give your answer to two decimal places.)
withdrawal rate: $
per year

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