Asked by Nancy

You have borrowed $135,000 from the bank today. You are required to repay this money over the next six years by making monthly payments of $2,215.10 at the end of each month. What is the quoted interest rate for the loan (with monthly compounding)?

Please show me the steps on how to solve this
Answered by Reiny
2215.1( 1 - (1+i)^-72)/i = 135000

very nasty equation to solve, since there is no "formula" way to do this
Wolfram is our saviour.
(notice I changed the i to x)

the reasonable answer is i = .00470829 for the monthly rate
so annual rate = 12(.0047...) = .056499..
or appr 5.65% per annum compounded monthly

check:
2215.10( 1 - 1.00470829^-72)/.00470829
= 134999.9987
how about that ????, not bad eh?
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