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math 4

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Henry Devine bought a new dishwasher for $320. He paid $20 down and made 10 monthly payments
of $34. What actual yearly interest rate did Henry pay?
A. 29.09
B. 68.75End of exam
C. 14.55
D. 34.38
Please explain to me

  • math 4 -

    Value of loan = $300

    let the monthly rate be i
    then
    34*(1- (1+i)^-10)/i = 300

    hard to solve this type of equation but I have some methods and it gave me
    i = appr .02343
    so the annual rate compounded monthly is 28.1 %

    check:
    34(1 - 1.02343^-10)/.02343 = = 299.9988 , not bad I would say

    None of your choices are valid using proper compound interest formulas

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