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calculate the effective annual rate of return

Question 6 A car rental company purchases cars from an East London vehicle manufacturer and immediately rents them to corporate clients on 5-year contracts. At the end of each 5-year contract the car rental company sells the used car to a second-hand car dealership. The current purchase price of each car is R350 000, and the company expects that the sale price of each car at the end of the 5-year contract will be R165 000. If the annual rental income is R93 080 payable monthly in advance, calculate the effective annual rate of return that the company expects to earn from each complete 'rental and sale' transaction. You must make use of linear interpolation and express your answer as a percentage correct to 3 decimal places. [14 Marks) Question 6 A car rental company purchases cars from an East London vehicle manufacturer and immediately rents them to corporate clients on 5-year contracts. At the end of each 5-year contract the car rental company sells the used car to a second-hand car dealership. The current purchase price of each car is R350 000, and the company expects that the sale price of each car at the end of the 5-year contract will be R165 000. If the annual rental income is R93 080 payable monthly in advance, calculate the effective annual rate of return that the company expects to earn from each complete 'rental and sale' transaction. You must make use of linear interpolation and express your answer as a percentage correct to 3 decimal places. [14 Marks)

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