SOLUTION: Jack seeks a loan of $250,000 from his bank. If repayments are annual in arrears (end-of-year), and his bank charges 11% p.a compounding monthly, what is the intrest rate value (An
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Question 1144865: Jack seeks a loan of $250,000 from his bank. If repayments are annual in arrears (end-of-year), and his bank charges 11% p.a compounding monthly, what is the intrest rate value (Answer in percentage to two decimal places, do not include % sign eg. 12.00) Answer by Theo(13342) (Show Source):
You can put this solution on YOUR website! 11% compounded monthly would be equal to (1 + .11/12) ^ 12 = 1.115718836 - 1 = .115718836 * 100 = 11.5718836%
rounded to 2 decimal places, that is equal to 11.57% effective annual interest rate percent.
the nominal annual interest rate percent is 11%.
the effective annual interest rate percent is 11.57%
the interest rate per month is (1 + .11/12) = 1.009166666... - 1 = .009166666.... * 100 = .9166666..... percent.
if the loan had to be paid off in one year, the end of year payment would have to be 265,144.97576.
this can be seen from the following spreadsheet printout that shows the month by month interest plus principal calculations to the end of the year.
