The following three mutually exclusive alternatives have no salvage value after 5 years. Construct a choice table for interest rates from 0% to 100%. A B C $2000 $3000 $6000 1652 11.7% First cost Uniform annual benefit 597 771 Computed rate of return 15% 9%

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.