To start a new business, Su Mei intends to borrow $25,000 from a local bank. If the

Question:

To start a new business, Su Mei intends to borrow $25,000 from a local bank. If the bank asks her to repay the loan in five equal annual installments of $6,935.24, determine the bank’s effective annual interest rate on the loan transaction. With annual compounding, what nominal rate would the bank quote for this loan?