On July 17, 2010, Tim McGraw borrowed $42,000 from his grandfatherto open a clot

Question

On July 17, 2010, Tim McGraw borrowed $42,000 from his grandfatherto open a clothing store. Starting July 17, 2011, Tim has to make10 equal annual payments of $6,500 each to repay the loan. (SO 8) Instructions Use a financial calculator to determine what interest rate Tim ispaying. BEC-25   On July 17, 2010, Tim McGraw borrowed $42,000 from his grandfatherto open a clothing store. Starting July 17, 2011, Tim has to make10 equal annual payments of $6,500 each to repay the loan.
Hint: Determine interest rate.
(SO 8)

Explanation / Answer

PV =$42,000 PMT=$6,500 n= 10 years

i [PV=$42,000,PMT=$6,500, n=10yrs, END] (because he borrowedthe money 1 period before his first payment)
=8.845%

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