Question 1 solving for r of an annuity you lend a friend, Ask an Expert

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Question: 1. (Solving for r of an annuity) You lend a friend $30,000, which your friend will repay in five equal annual end-of-year payments of $10,000, with the first payment to be received 1 year from now. What rate of return does your loan earn?

2. (Loan amortization) A firm borrows $25,000 from the bank at 12 percent compounded annually to purchase some new machinery. This loan is to be repaid in equal installments at the end of each year over the next 5 years. How much will each annual payment be?

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Category:- Basic Finance
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