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Q:1 Why is (1+i) called an interest factor? Factoring the expression $10,000 + 10,000 x i = 10,000 x (1+i) Thus (1+i) is an interest factor.
Q:2 You borrowed $1,584 and must repay $2,000 in exactly 4 years from today. Interest is compounded annually.
a. What is the interest rate [APR] of the loan? Answer 6.0%
b. What effective annual rate [EAR] are you paying? Answer 6.0%