The present value of 15 equal payments of size $400 at the beginning of every year starting today is $3795.66. The present value of 16 equal payments of size $500 at the beginning of every year starting today is $4913.56. Calculate the annual effective interest rate i.

The present value of 15 equal payments of size $400 at the beginning of every year starting today is $3795.66. The present value of 16 equal payments of size $500 at the beginning of every year starting today is $4913.56. Calculate the annual effective interest rate i.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 7P

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please do the following questions with full working handwritten

The present value of 15 equal payments of size $400 at the beginning of every year
starting today is $3795.66. The present value of 16 equal payments of size $500 at the beginning
of every year starting today is $4913.56. Calculate the annual effective interest rate i.
JL
1

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Step 3: calculation of 15 payments

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Step 4: Final rate for 15 payments

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Step 5: calculation of 16 payments

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Step 6: final rate for 16 payments

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