In: Finance
Angela loans Kathy $8,000. Kathy repays the loan by paying $5,000 at the end of one and a half years and $5,000 at the end of three years. The money received at t = is immediately reinvested at an annual effective interest rate of 5%. Find Kathy's annual effective rate of interest and Angela's annual yield. (Round your answers to two decimal places.)
Kathy's annual effective rate of interest = ________ %
Angela's annual yield = ___________%
1.
8000-5000/(1+r)^1.5-5000/(1+r)^3=0
=>r=10.565%
2.
=((5000*1.05^1.5+5000)/(8000))^(1/3)-1
=9.0681%