Engineering Economy – Problem 1.12

ByAnthony

A new engineering graduate who started a consulting business borrowed money for 1 year to furnish
the office. The amount of the loan was $23,800, and it had an interest rate of 10% per year. However, because the new graduate had not built up a credit history, the bank made him buy loan-default
insurance that cost 5% of the loan amount. In addition, the bank charged a loan setup fee of $300.
What was the effective interest rate the engineer paid for the loan?

Sample problems and notes are based on the following textbook: Engineering Economy 7th Edition

ISBN-13: 978-0073376301

ISBN-10: 0073376302

Edition: 7

Author: Leland Blank, Anthony Tarquin 

Published Date: 2011

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