Final answer:
The interest rate for the loan is calculated by determining the total interest paid over the loan period and using financial calculations to solve for the rate.
Step-by-step explanation:
To determine the rate of interest for a loan of $9,000 that is to be repaid with yearly payments of $2,684.80 for 5 years, we need to identify the total amount paid over the life of the loan and then calculate the total interest paid. The total amount repaid is $2,684.80 multiplied by 5, which equals $13,424. This means the total interest paid over the life of the loan is $13,424 minus the original loan amount of $9,000, resulting in $4,424 in interest.
To find the annual interest rate, we can use the formula for simple interest, but since the repayment is in the form of an annuity, we need to solve for the interest rate differently, typically using financial calculators or appropriate financial functions in spreadsheets. This calculation falls under the broader topic of the time value of money, which considers the present value and future value of cash flows.
Total interest is found by subtracting the original loan amount from the total amount repaid. The actual rate calculation typically requires a financial calculator or spreadsheet.