Answer:
Interest Rate=0.0635=6.35%
Explanation:
Given Data:
Money Borrowed last year=PV=$3,900
Future Payment as a lump sum payment=FV=$6,000
Total Number of years=n=7 years
Required:
Interest Rate=i=?
Solution:
Formula:
[tex]FV=PV(1+i)^n[/tex]
In our case, FV=$6,000, PV=$3,900, n=7
[tex]i=(\frac{FV}{PV})^{1/n}-1\\i=(\frac{6000}{3900})^{1/7}-1\\ i=0.0635[/tex]
Interest Rate=0.0635=6.35%
