What is the statement for step 3?
2 answers:
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Answer:
She is actually paying a rate of 7.36% of interest.
Step-by-step explanation:
The real interest rate, as a decimal, is given by:
In which r is the interest rate and n is the number of compoundings during an year.
The nominal rate on Sandra's loan is 7.125%, compounded monthly:
This means that
So
As a percentage: 1.0736*100 = 107.36% - 100% = 7.36%
She is actually paying a rate of 7.36% of interest.