Question 1173495: $5000 is loaned for 36 months with monthly payments of $162.50. Determine annual interest rate.
Not sure how to continue. Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website! the amount borrowed is 5,000.
the monthly payments are 162.50.
the payments are made for 36 months.
the payments are asumed to be made at the end of each month.
pv = -5000
fv = 0
np = 36
pmt = -162.50
payment at end of time period
click on ir to get:
ir = .874568%
that's the interest rate per month.
multiply it by 12 to get:
ir = 10.494816%
that's the interest rate per year.
round your answer to 2 decimal places and you get:
the monthly interest rate is .87%
the yearly interest rate is 10.49%
here are the results from using the online calculator.
with this calculator, the interest rate is shown as a percent.
if you were entering the interest rate, you would also have to enter it as a percent.
the interest rate and the time period have to be consistent.
for example, if the time periods are in years, the interest rate has to be per year and if the time period is in months, as in this problem, then the interest rate shown is % per month.
