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?

A. 7.55%

B.11.16%

c 12%

d.13.25%

- 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%

check

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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