Question: A loan may be repaid using the following two options of payments: i) Payments of 2,000 at the end of each year for eighteen years

A loan may be repaid using the following two options of payments:

i) Payments of 2,000 at the end of each year for eighteen years

ii) Payments of 2,500 at the end of each year for nine years.

Which of the following is closest to the effective annual interest rate being paid on the loan?

Note: the amount of loan is not provided.

A) 14% B) 17% C) 20% D) 23% E) 26%

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