Punjab Company borrowed $114,000 from its bank. Punjab will repay $150,000 in 7 years. What is...

Question

Question

Punjab Company borrowed $114,000 from its bank. Punjab will repay $150,000 in 7 years. What is the approximate interest rate

Answer 1

Answer #1

Present value(1+Interest rate)^number of years = Future Value

114,000(1+Interest rate)^7 = 150,000

(1+Interest rate)^7 = 1.315789

Interest rate = 3.9985%

i.e. 4%

Hence, rate charged = 4%

Answer 2

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