Question: Daniel owes $5,000. He repays the debt with level annual principal repayments and interest on the outstanding balance. All payments are made at the end

Daniel owes $5,000. He repays the debt with level annual principal repayments and interest on the outstanding balance. All payments are made at the end of the year. Because Daniel is a student, the maximum he can afford to pay is $1,000 per year.

Calculate the largest annual effective interest rate on the loan such that Daniel is still able to completely pay off the debt in 8 years.

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