# Effective rate of interest Find the interest rates earned on each of the following. Round each answer to two decimal places. You borrow \$700 and promise to pay back \$735 at the end of 1 year. % You lend \$700 and the borrower promises to pay you \$735 at the end of 1 year. % You borrow \$78,000 and promise to pay back \$196,418 at the end of 12 years. % You borrow \$9,000 and promise to make payments of \$2,684.80 at the end of each year for 5 years.

a. The effectual profit admonish is :

PV = \$700, gone you borrow \$700

FV = (\$735), gone you steadfast object the unite of money

N= 1 YEAR

PMT = 0

I/Y = 5

b. PV = (\$700), Gone you are lending the unite of money

FV= \$735 , gone you are getting paid object this unite.

N =1 YEAR

PMT = 0

COMPUTE I/Y

I/Y = 5%

Therefore, the effectual profit admonish is 5%.

c. PV = \$78,000

FV = (\$196,418)

N= 12 YEARS

PMT = 0

COMPUT I/Y

I/Y = 8%

d. PV = \$9000

FV = 0

N = 5 YEARS

PMT = (\$2,684.8), Gone you promised to steadfast a true unite of money at the object of full year.

COMPUTE I/Y

I/Y = 14.99%