Business Math
posted by Sandy
Cassandra is repaying an installment loan of $3,500 with 20 equal monthly
payments of $196 each. what is the annual percentage rate of the loan?

MathMate
The standard formula for installment amount A, for n periods with interest per period i, and present value (principal) P is
A=P((1+i)^n)i/((1+i)^n1)
where
n=20,
A=196
P=3500
substitute to get
196=3500i(1+i)^20/((1+i)^201)
I do not believe there is an explicit formula to solve for i, so we can solve it by trial and error or by iteration.
Rearrange to give
f(i)=1963500i(1+i)^20/((1+i)^201)
and we look for i that makes f(i)=0.
Make a table:
f(0.005)=11.67
f(0.01)=2.04
f(0.015)=7.86
Interpolating, we try
f(0.011)=0.0878
f(0.0111)=0.1086
So give a final try of
f(0.011045)=0.0005...
The interest per period is 1.1045%
Annual interest
=1.1045*12=13.254% approx.
Respond to this Question
Similar Questions

Math
Please check my answer thanks :) When repaing an installment loan of $3,500 with 20 equal monthly payments of $196 each , the apr of the loan is my answer is 13.5 % 
Math
please help me thanks :) Paul needs to repay a loan(installment loan) of $3,500 with 20 equal monthly payments of $196 each. What is the APR of the laon? 
math
Cassandra is repaying an installment loan of $3,500 with 20 equal monthly payments of $196 each. What is the annual percentage rate of the loan? 
business math
financing furniture that costs $4200.00 with a two year installment loan. The loan requires a 12% down payment and 24 equal monthly payments of $195.00. According to this information, what would be the finance charge on the loan? 
math
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? 
SOMEBODY HELP ME WITH MATH!!!!!!
A person wishes to borrow $20,000 and has the following options. One lending source offers the loan for 24 monthly payments at an annual percentage rate of 14%. The second source offers the loan for 18 monthly payments at an annual … 
Business Finance
Cassandra is repaying an installment loan of $3500 with 20 equal monthly payments of $196 each. What is the annual percentage rate of the loan? 
Corporate Finance
You have just taken a 30year mortgage loan for $200,000. The annual percentage rate on the loan is 8%, and payments will be made monthly. Estimate your monthly payments. 
Business math
find the annual percentage rate on a loan of $1,500 for 18months if the loan requires $190 interest and is repaid monthly. 
math
You purchase a hot tub costing $4,600 by taking out a 13% addon interest installment loan. The loan requires a 15% down payment and equal monthly payments for 4 years. How much are your monthly payments?