13. On January 1, 2013, Barbara takes out a $12,000 loan, at an annual effective interest...

 

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13. On January 1, 2013, Barbara takes out a $12,000 loan, at an annual effective interest rate of 7.5%. Interest is being paid annually beginning on January 1, 2014. In addition, a sinking fund is established to repay the principal on January 1, 2022. Payments are made into the sinking fund annually, with the first payment on January 1, 2014, and the last payment on January 1, 2022. The sinking fund earns an effective annual interest rate of 4%. From Barbara's point of view, what rate of interest is she really paying each year? 13. On January 1, 2013, Barbara takes out a $12,000 loan, at an annual effective interest rate of 7.5%. Interest is being paid annually beginning on January 1, 2014. In addition, a sinking fund is established to repay the principal on January 1, 2022. Payments are made into the sinking fund annually, with the first payment on January 1, 2014, and the last payment on January 1, 2022. The sinking fund earns an effective annual interest rate of 4%. From Barbara's point of view, what rate of interest is she really paying each year?

Answer rating: 100% (QA)

Heres how to calculate the effective interest rate Barbara is paying from her perspective 1 Calculate the annual loan payment This can be done using t... View the full answer