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In the monthly rate payment formula M= Pr(1+r)^n/(1+r)^n-1, what value do you give r if the interest rate is 7.3%?

2 Answers

6 votes

Answer:

0.61

Explanation:

User Walrii
by
5.9k points
9 votes

Answer:

r = 0.073/12 ≈ 0.0060833...

Explanation:

In the given amortization formula, the interest rate (r) is the rate for one payment period.

Period interest rate

The given 7.3% interest rate is presumed to be a nominal annual interest rate. Since there are 12 months in a year, the corresponding monthly interest rate is ...

7.3%/12 = 0.073/12 ≈ 0.00608333...(repeating)

The value of r that goes in this formula is 0.0608333...(repeating).

User Sanaz
by
6.2k points