If a borrower promises to pay you $1,900 nine years from now in return for a loan of $1,000 today,what effective annual interest rate is being offered if interest is compounded annually?

Name: If a borrower promises to pay you $1,900 nine years from now in return for a loan of $1,000 today,what effective annual interest rate is being offered if interest is compounded annually?
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Question

Quizplus · Accepted Answer

FV = PV × (1 + r)^t$1,900 = $1,000 × (1 + r)⁹r = 1.9^{1 / 9} − 1r = 0.0739, or 7.39%

If a Borrower Promises to Pay You $1,900 Nine Years