Question

A woman went to the Beneficial Loan Company and borrowed $10,000. She must pay $323.53 at the end of each month for the next 60 months. What is the monthly interest rate she is paying

Answer 1

Answer:

The Interest rate is 2%

Explanation:

The formula for computing the rate is as using the excel:

=Rate(nper,Pmt,pv,fv,type)

where

nper is number of years which is 60 months

PMT is monthly payment which is $323.53

PV is Present value which is -$10,000

FV is Future value which is $0

Type is also 0

So, putting the values above:

=Rate(60,323.53,-10000,0)

= 2%

Therefore, the rate of interest is 2%, which is monthly to be paid.