Question

With the exception of column one, all amounts are in dollars. Calculate the annual interest rate on this loan. Give your answer to the nearest hundredth percent. Do not include the % sign in your response.

Answer 1

Given:

Amortization table is given

Let r be the annual rate of interest.

`(r)/(12)\text{ be the monthly rate of interest.}`

Second payment:

P= $259873.20 ; interest = $539.24

`\text{Interest for the 2nd payment = }P((r)/(12)*(1)/(100))`
`539.24=259873.20((r)/(1200))`
`(539.24)/(259873.20)*1200=r`
`r=(647088)/(259873.20)`
`r=2.49`

Therefore, the annula rate of interest is 2.49%