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# If a used car retailer offers a financing plan on a $10,500 purchase requiring twelve equal monthly ... wrote... Posts: 136 Rep: 11 months ago If a used car retailer offers a financing plan on a$10,500 purchase requiring twelve equal monthly payments of \$900 including the first payment on the purchase date, what effective rate of interest is being charged on the unpaid balance?
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Edition: 11th
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tpriest1tpriest1
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Posts: 154
Rep:
11 months ago

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Anonymous
wrote...
A month ago
 Help! The answer is missing an explanation...
wrote...
Educator
3 weeks ago
 Here's what you do.First, use Excel and type in this code:=RATE(12, 900, -10500, , 1)12 is payments, 900 are the payment amounts, -10,500 is the present value, then leave a space ", ,", then 1 to indicate annuity due.You get:Then, take that value and apply this function:=A5*100*12Where "A5" happened to be the output for the first function.This gives:Finally, convert this to effective annual rate using this technique.This should help you further
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