Question

summer has an offer to buy an item with a sticker price of $13200 by paying $460 a month for 36 months. What interest rate is summer being offered?

Answer 1

The answer is 7.6% on apx for anyone who needs it

Answer 2

7.583%

Explanation:

We have the information that Summer has an offer to buy the item with the sticker price $13,200 i.e. the principal amount 'P' of the item is $13,200.

Further, she needs to pay $460 per month for 36 months .i.e. the total amount 'A' of the item is 460*36 = $16,560.

Also, the total time 't' to pay the amount is 36 months i.e. 3 years. This implies that the amount on the item is compounded monthly .i.e. n = 12

Let, the rate of interest = r %

Using the formula for compound interest given below, we will find the rate of interest.

`A = P * ( 1 + (r)/(n))^(nt)`

i.e.
`16,560 = 13,200*(1 + (r)/(12))^(12*3)`

i.e.
`(16,560 )/(13,200 ) = (1 + (r)/(12))^(36)`

i.e. r = 0.07583 = 7.583%

Hence, the annual interest rate is 7.583%