You are borrowing 3600 now which you will pay back at the, Ask an Expert

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You are borrowing $3,600 now, which you will pay back at the end of 25 years. You are considering two separate interest rates:

a. A fixed 8% annual interest rate.

b. A variable interest of 5.3% annual interest for the first 5 years; 5.7% annual interest rate for next 5 years; and i% interest rate for the remaining years. Assuming you desire to pay the least amount of money back at the end of 25 years, what value of i makes you indifferent between options a and b? With both options, you make exactly one payment at the end of 25 years. Enter your answer as a percentage between 0 and 100.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92718355

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