Asked by alex
Eden finances a purchase of $611.03 by making monthly payments of $26.17 for 2 1/2 years. What annual interest rate, compounded monthly, is she being charged?
Answers
Answered by
Reiny
26.17( 1 - (1+i)^-30)/i = 611.03
1 - (1+i)^-30 = 23.3485i
I don't know how your course expects you to solve for this, there are several ways that fall under the topic of
"numerical methods"
Online Wolfram is excellent ...
http://www.wolframalpha.com/input/?i=solve+26.17%281+-+%281%2Bx%29%5E-30%29%2Fx+%3D+611.03
to get i = .017 (I changed it to x, since Wolfram interpreted i as √-1 )
So the annual rate is appr .017(12) = .204
or 20.4 % per annum compounded monthly
check
26.17(1 - 1.017^-30)/.017
= 611.03 , how is that ????
1 - (1+i)^-30 = 23.3485i
I don't know how your course expects you to solve for this, there are several ways that fall under the topic of
"numerical methods"
Online Wolfram is excellent ...
http://www.wolframalpha.com/input/?i=solve+26.17%281+-+%281%2Bx%29%5E-30%29%2Fx+%3D+611.03
to get i = .017 (I changed it to x, since Wolfram interpreted i as √-1 )
So the annual rate is appr .017(12) = .204
or 20.4 % per annum compounded monthly
check
26.17(1 - 1.017^-30)/.017
= 611.03 , how is that ????
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