Question

Eden finances a purchase of $611.03 by making monthly payments

Answer 1

Answer:

Annual rate of interest will be 132.876 %

Step-by-step explanation:

We have given amount which he has to pay A = $611.03

He does a monthly payment of $26.17

So principle amount P = $26.17

Time = 2.5 years

As payment is done monthly so time period = 12×2.5 = 30 periods

Future amount is given by

$A=P(1+\frac{r}{100})^n$

$611.03=26.17(1+0.01r)^{30}$

$(1+0.01r)^{30}=23.3484$

$(1+0.01r)=23.3484^{\frac{1}{30}}=1.110$

$0.01r=1.110-1=0.11$

$r=11.07$ %

So annual rate will be 11.07×12 = 132.876%

Annual rate of interest will be 132.876 %