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Find what is the effective annual rate of interest on loan

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The J. B. Marcum Company needs $250,000 to finance a new minicomputer. The computer sales firm has offered to finance the purchase with a $50,000 down payment followed by five annual installments of $59,663 each. Alternatively, the firm's bank has offered to lend the firm $250,000 to be repaid in five annual installments based on an annual rate of interest of 16 percent. Finally, the firm has arranged to finance the needed $250,000 through a loan from an insurance company requiring a lump-sum payment of $385,080 in 5 years.

Question a. What is the effective annual rate of interest on the loan from the computer sales firm?

Reference no: EM132539476

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