I = 10,000(0.08)/4 = $200 per quarter (a) 0 = -6000 + 200(P/A,i*,12) + 11,500(P/F,i*,12) Solve for i* by trial and error or spreadsheet i* = 8.13% per quarter (RATE function) (b) Nominal i*/year = 8.13(4) = 32.5% per year

What will be an ideal response?


I = 10,000(0.08)/4 = $200 per quarter
(a) 0 = -6000 + 200(P/A,i*,12) + 11,500(P/F,i*,12)
Solve for i* by trial and error or spreadsheet
i* = 8.13% per quarter (RATE function)
(b) Nominal i*/year = 8.13(4) = 32.5% per year

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