Question:

Find the effective rate of interest?

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Find the effective rate of interest on a 15 year capital lease with a present value of $56,730 if lease payments are $5,841 annually.

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  1. $56,730 divided by $5,841 = 9.7123

    Using the Present value of an ordinary annuity table attached, look at the 15 periods row, and at 6%, you'll see 9.71225. So the effective interest is 6%p.a.

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