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6. (17) What is the annual effective interest rate on an investment that has earnings including payback of the original inves

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Answer #1

Say, the initial investment date is 1/12019, so the payment would be as following-

The EAR would be the IRR of the cash flows for the following cash flows:

A B Month Investment 1/1/2019 -12000 2/28/2019 1200 4/30/2019| 10/31/2019 12/31/2019 1500 1500 1600 1/31/2020 3/31/2020 600 1

A B C Month Investment 1/1/2019 -12000 2/28/2019 1200 4/30/2019 1500 10/31/2019 1500 12/31/2019 1600 1/31/2020 600 3/31/2020

So, EAR is 20.02%

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