You agree to loan your sister $22,000. She will repay you in monthly installments of $450...

You agree to loan your sister $22,000. She will repay you in monthly installments of $450 for 5 years. What is the EAR on the loan? Round your answers to two decimal places

Solutions

Expert Solution

monthly rate will be

=RATE(nper,pmt,pv,fv)

=RATE(5*12,450,-22000,0)

=0.6976%

What is the EAR on the loan=(1+0.6976%)^12-1=8.70%

jeff jeffy answered 2 years ago

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