Bob and Barbara are friends. Bob takes out a $10,000 loan and agrees to repay it...

 

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Bob and Barbara are friends. Bob takes out a $10,000 loan and agrees to repay it over twelve years by making annual level payments at an effective rate of 5.62499%. At the same time, Barbara takes out a $10,000 loan and agrees to repay it by making annual interest payments at an annual effective interest rate of i. She also agrees to make annual level deposits into a sinking fund that earns 4% annual effective interest so as to accumulate $10,000 at the end of the twelve years. Bob and Barbara discover they have the same total annual expenditures resulting from their loans. Find the rate i. Bob and Barbara are friends. Bob takes out a $10,000 loan and agrees to repay it over twelve years by making annual level payments at an effective rate of 5.62499%. At the same time, Barbara takes out a $10,000 loan and agrees to repay it by making annual interest payments at an annual effective interest rate of i. She also agrees to make annual level deposits into a sinking fund that earns 4% annual effective interest so as to accumulate $10,000 at the end of the twelve years. Bob and Barbara discover they have the same total annual expenditures resulting from their loans. Find the rate i.

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