A $10,000 debt is repaid by payments of $800 at the end of each quarter for five years. What quarterly-annually compounded nominal interest rate was charged on the loan?

A) 23.10%
B) 4.96%
C) 11.08%
D) 9.81%
E) 19.86%

The correct answer is found by using the formula for the present value of an annuity: $PV=PMT\times \left[\frac{1-(1+r{)}^{-n}}{r}\right]$ , where PV is the present value (or initial loan amount), PMT is the payment amount per period, r is the interest rate per period, and n is the total number of payments. Rearranging to solve for r when PV = $10,000, PMT = $800, and n = 20 (5 years of quarterly payments), we find that the interest rate that fits these conditions is approximately 4.96% per quarter, compounded quarterly.