What is the lender yield rate on this entire investment

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A twenty-year loan of $25,000 is negotiated with the borrower agreeing to repay principal and interest at 5%. A level payment of $ 1,500 will apply during the first ten years, and a higher level payment will apply over the remaining ten years. Each time the lender receives a payment from the borrower, he will deposit the portion representing principal into a sinking fund with an annual effective interest rate of 4%. (This is the amount for replacement of capital.) What is the lender's yield rate on this entire investment?

Reference no: EM132073348

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