Can someone help? Pls
1 answer:
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Answer:
The yearly interest rate is 5.20%.
Step-by-step explanation:
This is a compound interest problem
The compound interest formula is given by:
In which A is the amount of money, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per unit t and t is the time the money is invested or borrowed for.
In this problem, we have that:
The loan outstanding is the value of the loan that has not been repaid.
Here, it is .
To find the interest rate, we first have to find how much money the borrower will have to pay, that will be the value of A in the compound interest formula.
The total he will have to play is plus the $3,568 he has already paid in each of the previous 2 years = 24 months. So:
.
P is the value of loan, so
r is the interest rate, the value we have to find.
We have to find the annual interest rate, so .
We found the total amount in 2 years, so .
Solving
To find r, i will take the square root of both sides of the equation. So
The yearly interest rate is 5.20%.