document.write( "Question 1182214: You apply for a $1100 loan, which you plan to repay in 5 years. You are told by the loan officer that the amount payable when the loan is due is $2700. What rate of interest, compounded bi-weekly, are you being charged? Round answers to 2 decimal places. \n" ); document.write( "

Algebra.Com's Answer #812228 by Boreal(15235) $\"\"$ $\"About$

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compounded 26 times per year or 130 times in 5 years
\n" ); document.write( "2700=1100(1+(r/26))^130
\n" ); document.write( "divide by 1100
\n" ); document.write( "2.4545=(1+(r/26))^130
\n" ); document.write( "logs of both sides
\n" ); document.write( "0.38997=130 log (1+(r/26))
\n" ); document.write( "divide by 130
\n" ); document.write( "0.003=log(1+(r/26))
\n" ); document.write( "raise everything to the 10 power
\n" ); document.write( "1.00693=1+(r/26)
\n" ); document.write( "subtract 1 and multiply by 26 to get the rate=0.1800 or 18%
\n" ); document.write( "The rule of 70 would say that 70/18%, just below 4, is the doubling time of the loan in years, which makes sense in the context of this problem.\r
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