question archive 1)John Doe Enterprises borrowed $149,500 for three years from the bank
1)John Doe Enterprises borrowed $149,500 for three years from the bank
Subject:FinancePrice:2.84 Bought6
1)John Doe Enterprises borrowed $149,500 for three years from the bank. At the end of the three years, they repaid the loan with one payment of $176,590. What was the quoted interest rate on the loan? Assume the interest rate is quoted as APR compounded annually.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Quoted interest rate = 5.71%
Step-by-step explanation
The calculation is shown below:
Present Value = Future Value/(1+APR)^Years
$149,500 = $176,590/(1+APR)^3
(1+APR)^3 = ($176,590/$149,500)
APR = [($176,590/$149,500)^(1/3)] - 1
= [(1.18120401338)^(1/3)] - 1
= 1.0570810919 - 1
= 0.0570810919
Or
= 5.71%
Quoted interest rate = 5.71%
