Can you help with the below Determining Interest Rates. The Benevolent Company has agreed to lend...

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Can you help with the below Determining Interest Rates. The Benevolent Company has agreed to lend...

Can you help with the below

Determining Interest Rates. The Benevolent Company has agreed to lend you funds to complete the last year of your degree. The Company will lend you $2,400 today, if you agree to repay a lump sum of $4,000 four years from now. What is the approximate annual rate of interest that Benevolent is charging you?

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Answer 1

Answer #1

Present value = 2400

Future value = 4000

N = 4

I = ??

Future value = Present value * (1 + I)^N

4000 = 2400 * (1+I)^4

(1+I)^4 = 1.666667

I = 13.62%

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Answer 2

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