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Jed wants to borrow ​$1000 from you. He is proposing to repay you with three annual...

Jed wants to borrow ​$1000 from you. He is proposing to repay you with three annual payments of ​ $324.59 starting immediately. In​ addition, he will make a final​ lump-sum payment of ​$150 three years from today. What rate of return are you earning on the​ loan?

Solutions

Expert Solution

Solution:

Net amount of loan given = $1,000 - $324.59

Computation of rate of return
Period Cash Flows ROR
0 -$675.41 10.06%
1 $324.59
2 $324.59
3 $150.00

ekkarill92 answered 1 week ago
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