You just borrowed $15,000 from a bank. If you pay $4,000 at the end of each year over the next 5 years, you will pay off the loan. What is the interest rate on the loan?

Question

You just borrowed $15,000 from a bank.  If you pay $4,000 at the end of each year over the next 5 years, you will pay off the loan.  What is the interest rate on the loan?

Ms. Sue · Answer

(4,000 * 5) - 15,000 = 5,000 I = prt 5,000 = 15,000 * r * 5 5,000 = 75,000 * r 100(5,000 / 75,000) = r 6.67% = r

Brian · Answer

This is not the answer that my professor gave in his solutions. He has an interest rate of 10.425% I know it is a present value annuity, just don't know how to set up and solve for the i, the unknown.