Question

Shen took out a loan for 7600 that charges an annual interest rate of 8.2%, compounded monthly. Answer each part

Answer 1

Step 1

Given;

`\begin{gathered} P=7600 \\ r=(8.2)/(100)=0.082 \\ t=1 \end{gathered}`

Step 2

A) she will owe

`\begin{gathered} A=P(1+(r)/(n))^(nt) \\ A=7600(1+(0.082)/(12))^(12*1) \\ A=\text{ \$}8247.16 \end{gathered}`

B) The effective annual rate is given as;

`\begin{gathered} R=(1+(i)/(n))^n-1 \\ R=[(1+(0.082)/(12))^(12)-1]*100 \\ R=0.08515*100=8.515\text{\%} \\ R\approx8.52\text{\%} \end{gathered}`