Barnhiser Goods needs $100,000 to finance a project. It is negotiating a loan, and the bank has
Question:
Barnhiser Goods needs $100,000 to finance a project. It is negotiating a loan, and the bank has offered several different payment schedules. Compute the effective interest rate on each schedule, and identify the schedule with the lowest effective interest rate.
a. $14,900 payments at the end of each year for ten years.
b. $10,000 payments at the end of each year for five years, and a $100,000 payment at the end of the fifth year.
c. $10,300 payments at the end of each year for 15 years.
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