Question:
Lang Warehouses borrowed $100,000 from a bank and signed a note requiring 20 annual payments of
$13,388 beginning one year from the date of the agreement.
Required:
Determine the interest rate implicit in this agreement.
Answer:
PVA factor = $100,000 = 7.46938
$13,388
Present value of an ordinary annuity of $1: n = 20, i = ? (from Table 4, i =
approximately 12%)
Lang Warehouses borrowed $100,000 from a bank and signed a note requiring 20 annual payments of
$13,388 beginning one year from the date of the agreement.
Required:
Determine the interest rate implicit in this agreement.
Answer:
PVA factor = $100,000 = 7.46938
$13,388
Present value of an ordinary annuity of $1: n = 20, i = ? (from Table 4, i =
approximately 12%)
