What is the interest rate in the first year

Reference no: EM131947173

Question: Bob borrows 1000 from Ed at effective annual interest rate i, agreeing to repay in full at the end of one year. When the year is up, Bob has no money, but they agree that he can repay one year later in such a way that the effective annual discount rate d in the second year is numerically equal to the interest rate i in the first year. At the end of the second year Bob pays 1200. What is i in the first year?

Reference no: EM131947173

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