Question

A car that retails for $14,999 has a sticker on the windshield that says, "$429/mo for 48 months." What interest rate is this car financed at?

Answer 1

14,999(1+.o825)^4= 20,595. $429x48 months= 20,592
Interest rate 8 1/4%

Check 20592/14999= 1.37289
Log(1.37289)/ log(1.0825)= 3.99 years

Answer 2

r=8.2%

Explanation:

A car that retails for $14,999 has a sticker on the windshield that says, "$429/mo for 48 months." What interest rate is this car financed at?

from compound interest formula

A=P(1+r%)^n

The parameters are

A=amount, 429*48=20592

n=48 months, 4 years

r%=?

P=14999

20592=14999(1+r%)^4....dividing both sides by 14999

1.372=(1+r%)^4

find the fourth root of both sides

1+r%=1.082

r%=0.082

r=8.2%

the interest fate on the car will be the above.