On this date last year you borrowed $7,450. You have to repay the loan principle plus all of the interest four years from today. The payment that is required at that time is $11,426. What is the
Interest rate on this loan?

Question

Quizplus · Accepted Answer

To find the interest rate, we use the formula for compound interest: Future Value = Present Value * (1 + r)^n. Here, $11,426 = $7,450 * (1 + r)^4. Solving for r gives approximately 8.93%.

On This Date Last Year You Borrowed $7,450