What Annual Rate of Return Is Implied on a $5,000

question 51

Multiple Choice

What annual rate of return is implied on a $5,000 loan taken next year when $7,700 must be repaid in year 8?

• A) 6.36 percent
• B) 7.12 percent
• C) 8.54 percent
• D) 11.62 percent

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Definitions:

Debt Transactions

Financial operations involving the borrowing and lending of funds, where repayment is required, often with interest.

Conventional

Pertaining to widely accepted standards or methods.

Use

The act of employing something for a particular purpose.

Mortgages

Loans used to purchase a property, where the property itself serves as security against the loan.