Question

Find I. Choose the correct answer. Amount Financed (m) = $1,400 Number of Payments per year (y) = 12 Number of Payments (n) = 24 Total Interest (c) = $200.50

I = answers are 13.9 13.7 and 14.1

its not 7.7

Answer 1

(2×12×200.5)÷(1,400×25)
=0.1375*100=13.75%

Answer 2

Option 2 - The interest rate is 13.7.

Explanation:

Given : Amount Financed (m) = $1,400, Number of Payments per year (y) = 12 Number of Payments (n) = 24, Total Interest (c) = $200.50.

To find : The value of I?

Solution :

The formula used is

`c=(m* I* (n+1))/(t* y* 100)`

Where,

Total Interest (c) = $200.50

Amount Financed (m) = $1,400

Number of Payments per year (y) = 12

Number of Payments (n) = 24

Number of years (t)=2 (as n=24 is payment monthly)

Substitute all values in the formula,

`200.50=(1400* I* (24+1))/(2* 12* 100)`

`I=(200.50* 2* 12* 100)/(1400* 25)`

`I=(481200)/(35000)`

`I=13.7`

Therefore, The interest rate is 13.7.

So, Option 2 is correct.