Question: Sally Johnson loaned a friend $10,000 at 15% interest, compounded annually. She is to repay the loan .in five equal end-of-year payments. Sally estimates the

Sally Johnson loaned a friend $10,000 at 15% interest, compounded annually. She is to repay the loan .in five equal end-of-year payments. Sally estimates the inflation rate during this period is 12%. After taking inflation into account, what rate of return is Sally receiving on the loan? Compute your answer to the nearest 0.1%. (Answer: 2.7%)

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