Concept explainers
Interest Rate John buys a stereo system for $640. He agrees to pay $32 a month for 2 years. Assuming that interest is compounded monthly, what interest rate is he paying?
The interest rate that John has to pay to buy a stereo system.
Answer to Problem 25E
The interest rate that John has to pay to buy a stereo system is
Explanation of Solution
Given:
John buys a stereo system for
Formula used: The monthly amount payment is,
Where,
Calculation:
The total number of payments is,
Substitute
The value of
Figure (1)
From the graph, the value of monthly interest is
Multiply the value of interest rate by a factor
Thus, the interest rate that John has to pay is
Chapter 12 Solutions
Precalculus: Mathematics for Calculus - 6th Edition
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