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

Answer 1

The yearly interest rate that Noel payed is 29.09%

Answer 2

Cost price of Dishwasher bought by Noel Divine = $ 320

Down payment = $ 20

Amount given in one installment= $ 34

Total Amount paid in 10 Installment = $34 ×10=$ 340

Total amount paid for Dishwasher by Noel Divine = $340 + $ 20 = $ 360

Interest paid by noel = $ 360 - $ 320= $ 40

As the interest will be simple interest

Simple interest =
`\frac{Principal * \text{time} \ \text{rate}}{100}`

40=
`(320 * R * (10)/(12))/(100)`

R=
`(48000)/(3200)`=15% →→Option A