Como Company Borrowed $5,200 from Its Bank A) 7%
B) 8%
C) 9%
D) 29

question 95

Multiple Choice

Como Company borrowed $5,200 from its bank. Como will repay $7,300 in five years. What is the approximate interest rate that Como will incur on this loan, assuming annual compounding? Use the future value of $1 table.
Excerpt of Future Value of $1 Table
$$\begin{array} { | c | c | c | c | } \hline \text { Periods } & \mathbf { 7 \% } & \mathbf { 8 \% } & \mathbf { 9 \% } \\\hline 1 & 1.07000 & 1.08000 & 1.09000 \\\hline 2 & 1.14490 & 1.16640 & 1.18810 \\\hline 3 & 1.22504 & 1.25971 & 1.29503 \\\hline 4 & 1.31080 & 1.36049 & 1.41158 \\\hline 5 & 1.40255 & 1.46933 & 1.53862 \\\hline 6 & 1.50073 & 1.58687 & 1.67710 \\\hline\end{array}$$

• A) 7%
• B) 8%
• C) 9%
• D) 29%

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