What is the effective annual rate of a loan

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Reference no: EM131983879

1. Travis just purchased a new Corvette. To finance this purchase, he paid $40,000 in cash and borrowed $56,000 from his father. Travis has promised to repay his father in 6 equal annual payments at an interest rate of 6 percent. What is the amount of each payment?

$9,333.00

$11,388.31

$11,416.76

$9,633.00

2. What is the effective annual rate of a loan that charges interest at a rate of 7.0 percent, compounded continuously?

7.47 percent

7.14 percent

7.25 percent

7.36 percent

Reference no: EM131983879

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