What will be the effective interest rate when you repay a loan of $48,000 in five...

What will be the effective interest rate when you repay a loan of $48,000 in five years if the interest rate is 8.75% compounded continuously?

Expert Solution

The annual interest rate = r= 8.75% compounded continuously

The effective interest rate = e^r - 1

=e^(8.75%) - 1

=0.09144226444

~ 9.14%

Rahul Sunny answered 2 years ago

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