Your uncle the banker offers to lend you $25,000 to start a new business. You will have to make a payment of $7,000 at the end of each of the next 3 years plus a final payment of $10,000 at the end of Year 4. What annual interest rate is built into this loan?

Annual interest rate = 6%

Explanation:

Amount of loan = $25,000

The total amount repaid:

($7,000 × 3 years) + ($10,000 balloon payment)

= (7,000 × 3) + (10,000)

21,000 + 10,000 = $31,000

Interest on payment = repayed amount - loaned amoun

Interest on payment = 31,000 - 25,000 = $6,000

Let the total percentage on the loaned amount be x

Therefore we are looking for what percentage rate of the loaned amount ($25,000) will give the interest of $6,000

x % of 25,000 = 6,000

Therefore the total percentage interest rate = 24%

Annual interest rate = Total interest rate ÷ number of years

Annual interest rate = 24 ÷ 4 = 6%

∴ Annual interest rate = 6%

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

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