Posted by Jessie on Sunday, January 16, 2011 at 2:17pm.
Cassandra is repaying an installment loan of 3,500 with 20 equal payments of 196.00 each.What is the annual percentage rate of the loan?
- math - Reiny, Sunday, January 16, 2011 at 3:43pm
The question is not worded very clearly.
Are the payments made monthly?
Is this a simple interest or compound interest problem?
None of the rates given as choices verify when considering compound interest
so assuming this is simple interest,
interest = 20(196) - 3500 = 420
rate = 420/((3500)(1))= .12 or 12%
- math - Jessie, Sunday, January 16, 2011 at 4:53pm
Thank you,I put the question down just like it is in my book,I was confused also.I did come up with 12%,so hopefully it is right.Thanks again!
- math - helper, Sunday, January 16, 2011 at 4:56pm
I = PRT
R = I/PT
I = 20(196) - 3500
I = 3920 - 3500
I = 420
T = 20 mo/12
T = 1.667 yr
R = I/PT
R = 420/(3500 * 1.667)
R = 420/5834.5
R = .071986
R = 7.2%
I = PRT
I = 3500 x 7.2% x 1.667 yr
I = 252 x 1.667
I = 420.084
I am not a tutor
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