If a Borrower Promises to Pay You $1,900 Nine Years

question 28

Multiple Choice

If a borrower promises to pay you $1,900 nine years from now in return for a loan of $1,000 today, what effective annual interest rate is being offered?

• A)5.26 percent
• B)7.39 percent
• C)9.00 percent
• D)10.00 percent PV =

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Definitions:

Hostility

Aggressive or antagonistic attitudes, feelings, or actions towards others.

Heart Attack

A medical condition occurring when blood flow to a part of the heart is blocked for a long enough time to cause damage or death to heart muscle, often resulting from coronary artery disease.

Type B Personality

A personality type that is laid back and less scheduled.

Elevated Blood Pressure

A condition where the force of the blood against the walls of the arteries is consistently higher than normal.