Answer:
Yield to maturity = 58.5%
Step-by-step explanation:
The yield to maturity on the loan can be worked out using the Future value of a lump sum formula.
The future value of a lump sum is the amount it would amount to if interest is earned and compounded at a certain interest rate.
The formula is
FV = PV × (1+r)^(n)
PV = Present Value- 1,500
FV - Future Value, - 15,000
n- number of period- 5=
r- yield to maturity ?
15,000 = 1,500× (1+r)^(5)
(1+r)^(5) =15,000/1,500 =10
(1+r)^(5) =10
1+r = 10^(1/5)
r= 10^(1/5) -1 = 0.5848
r = 0.5848 × 100 = 58.5%
r=58.5%
Yield to maturity = 58.5%