Question

Noel Devine bought a new dishwasher for $320. He paid $20 down and made 10 monthly payments of $34. What actual yearly interest rate did Noel pay?


A. 68.75%
B. 14.55%
C. 34.38%
D. 29.09%

Answer 1

29.09% is the intrest rate

Answer 2

Answer:

The correct option is B. 14.55 %

Step-by-step explanation:

Cost price of the new dishwater = $320

Down payment made by Noel = $20

Amount which is left to be paid = 320 - 20 = $300

Number of monthly payment = 10

Amount paid for each monthly payment = $34

Total amount paid by Noel = Down payment + Total monthly payment

                                             = 20 + 34 × 10

                                             = $360

Interest paid by Noel = 360 - 320

                                     = $40

Principal value of the interest = $300

Time = monthly payment months + 1 ( This is the month in down payment is made)

Time = 11 months

$\bf\text{Time = }\frac{11}{12}\text{ years}$

$\text{Now, Rate = }\frac{interest\times 100}{Principal\times \frac{11}{12}}\\\\\implies Rate = 14.55\%$

Actual yearly interest paid by Noel = 14.55 %

Therefore, The correct option is B. 14.55 %