Question 1182272
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.
<pre>Use the formula for the interest rate of a SINGLE amount. 
This is: {{{matrix(1,3, i, "=", m(A/P)^(1/mt) - m)}}}, where: {{{A}}} = Accumulated amount, or future value ($2,700, in this case)
                                   {{{P}}} = Present Value, or Principal invested, or INITIAL amount deposited  ($1,100, in this case)
                                   {{{i}}} = Annual Interest rate (UNKNOWN, in this case)
                                   {{{m}}} = Number of ANNUAL compounding periods (Bi-weekly, or every 2 weeks, or 26, in this case)
                                   {{{t}}} = Time, in years (5, in this case)

         {{{matrix(1,3, i, "=", m(A/P)^(1/mt) - m)}}} then becomes:  {{{matrix(1,3, i, "=", 26("2,700"/"1,100")^(1/(26 * 5)) - 26)}}}
 
                      Interest rate, or {{{highlight_green(matrix(1,5, highlight(i), "=", 26(27/11)^(1/130) - 26, "=", highlight("18.02%")))}}}

If bi-weekly means every 2 weeks, then change m, or 26 above, to 2(52), or 104, and re-calculate.

Capeesh/Capiche/Capisce?</pre>