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Q: Doris Wade purchased a condominium for $50,000 in 1987. Her down payment was $20,000. She financed the remaining amount as a $30,000, 30-year mortgage at

Doris Wade purchased a condominium for $50,000 in 1987. Her down payment was $20,000.

She financed the remaining amount as a $30,000, 30-year mortgage at 7%, compounded monthly.

Her monthly payments are $200. It is now 2007 (20 years later) and Doris has sold the condominium for $100,000, immediately after making her 240th payment on the unit.

Her effective annual internal rate of return on this investment is closest to which answer below?

(A) 3.6%

(B) 8.5%

(C) 5.3%

(D) 1.5%

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