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2 years ago

6

John is planning to take out a personal loan for $4,500 to buy a car. He would like to keep his monthly payments at or below $15

0. 00 and pay the loan off in three years. Which of the following is the greatest interest rate John can accept and still meet his criteria? a. 10. 75% compounded monthly b. 11. 50% compounded monthly c. 12. 25% compounded monthly d. 13. 00% compounded monthly.

2 answers:

OLEGan [10]2 years ago

7 0

Answer:

I think A is the best Choice

klemol [59]2 years ago

3 0

The greatest interest rate that John can accept and meet the criteria is 12.25% compounded monthly

The monthly payment formula for a loan:

$p= (\frac{pv \times r}{1-(1+r} )^{nt}$

Where PV is the principal value of the loan,

r is the rate per month,

n is the number of months,

Here, PV = $ 4,500, n = 36,

Let r be the annual rate of interest,

P ≤ 150

$p= (\frac{4500 \times \frac{r}{12} }{1-(1+\frac{r}{12}} )^{36}\leq 150$

$375\times r \leq 150-150\times (1+\frac{r}{12})^{36}$

$r\leq 0.1225$

Thus, the greatest annual interest rate = 0.1225 = 12.25 %

Therefore, Option C is correct.

To know more about the monthly payments and interest rate, refer to the link below:

brainly.com/question/2557439

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