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    Calculating the effective annual interest rate

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    If you barrow $4,000 at $500 interest for one year, What is your effective interest rate for the following payment plans?

    a. Annual payment.
    b. Semiannual payment.
    c. Quarterly payment.
    d. Monthly payment.

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    https://brainmass.com/business/interest-rates/calculating-the-effective-annual-interest-rate-471079

    Solution Preview

    If you barrow $4,000 at $500 interest for one year, What is your effective interest rate for the following payment plans?

    a. Annual payment.
    Annual number of payments=1
    Interest=$500
    Total number of payments=1
    Principal=$4000

    Effective interest rate=(2*Annual number of ...

    Solution Summary

    Solution describes the steps to calculate effective interest rate in the given cases.

    $2.19

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