I need help with the following question.It is about Math of Finance.Questions:A $3500 loan was settled ten years later with a payment of $8100. Determine the annual rate of return.
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Answer:The annual rate of return is 13.14%.Step-by-step explanation:As it is not mentioned whether the amount was compounded, so we will assume this to be simple interest.Given is - A $3500 loan was settled ten years later with a payment of $8100.Means total amount paid back was = $8100And original principle was = $3500So, interest paid = [tex]8100-3500=4600[/tex] dollarsNow simple interest formula is :[tex]I=p\times r\times t[/tex]Where p = 3500I = 4600r = ?t = 10Now putting these values in formula we get;[tex]4600=3500\times r\times10[/tex][tex]r=4600/35000[/tex]r= 0.1314So, rate of interest = 13.14%