Posted by **Will** on Thursday, November 8, 2012 at 4:04pm.

You borrow $2,600 and repay the loan in 12 monthly installments of $232.

What was the finance charge per $100 of the amount financed?

- Business Math Question -
**Reiny**, Thursday, November 8, 2012 at 5:59pm
let the monthly interest rate be i

232( 1 - (1+i)^-12)/i = 2600

(1 - (1+i)^-12 )/i = 11.2069

1 - (1+i)^-12 = 11.2069 i

1 - (1+i)^-12 - 11.2069 i = 0

This equation cannot be solved by the usual standard methods.

we can try some values of i

let i = .01

LS = .0004818 , RS = 0 , not a bad guess

let i = .011

LS = -.000249 , hey that's even closer, but now it is negative,

So i must be between .01 and .011

do you get the idea?

correct to 5 decimals I got i = .01068

so the monthly charge on $100 is $1.068

Unusual way to state the question, usually it would be stated as an annual interest rate with the stated compound interest period

e.g. in this case:

.01068(12) or 12.816 % interest per annum compounded monthly.

## Answer This Question

## Related Questions

- Algebra - A woman wants to borrow $11,000 in order to buy a car. She wants to ...
- Business Math Question - Find the finance charge per $100 on a loan of $12,600 ...
- Math - Tim Worker buys a new sofa for $549.95. He pays 20% down and takes an ...
- math - Tim Worker buys a new sofa for $629.95. He pays 25% down and takes an ...
- consumer math - Tim Worker buys a new sofa for $629.95. He pays 25% down and ...
- Math - Richard borrowed 180000 dollars from his bank to help finance the ...
- Business Math - Can someone please check over my answers? I'm not sure about ...
- Mathematics of Finance - Richard borrowed 170000 dollars from his bank to help ...
- Math - 4. Vanna has just financed the purchase of a home for $200 000. She ...
- Maths - In order to make some home improvements, a home owner spent $40,000. He ...

More Related Questions