Question

"Roger has just lost a lawsuit and has agreed to make equal annual payments of $14,200 for the next 8 years with the first payment due today. The value of this liability today is $90,000. What is the interest rate on the payments?"

Answer 1

Answer:

26.22

Explanation:

Total Payments = $14,200 X 8 Instalments

=$113,600

Interest = Total Payments - Initial Liability

= $113,600 - $90,000 = $23,600

Interest Rate = $,23,600/$90,000X 100

=26.22%