Ask Question
18 October, 10:29

What annual rate of return is implied on a $2,500 loan taken next year when $4,500 must be repaid in year 5?

+2
Answers (1)
  1. 18 October, 10:42
    0
    Calculation of the implied annual rate of return:

    It is given that a $2,500 loan shall be taken next year when $4,500 must be repaid in year 5. It means the loan duration is 4 years and interest amount is (4500-2500) = 2000

    $2,000 is interest for 4 years so interest for one year shall be 2000/4 = $500

    So the annual rate of return shall be calculated as follows:

    Annual Interest rate = Annual Interest / Principal amount = 500/2500 = 0.20 = 20%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “What annual rate of return is implied on a $2,500 loan taken next year when $4,500 must be repaid in year 5? ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers