Matthew needed money for some unexpected expenses, so he borrowed $2,587.09 from a friend and agreed to repay the loan in three equal installments of $950 at the end of each year. What is the implied interest rate in this agreement?

The implied interest rate in this agreement is 3.3%

Explanation:

Total loan paid at end of third year = $950*3 = $2850

Implied rate = (forward / spot) raised to the power of (1 / time) - 1

 Implied rate = [ (2850/2587.09) raised to the power of (1/3) - 1] * 100

 Implied rate = [1.0328 - 1] * 100

 Implied rate = 0.033 * 100

 Implied rate = 3.3%