Concept explainers
Interest Rate A man purchases a $2000 diamond ring for a down payment of $200 and monthly installments of $88 for 2 years. Assuming that interest is compounded monthly, what interest rate is he paying?
To find: The interest rate on the diamond ring.
Answer to Problem 28E
The interest rate on the diamond ring is
Explanation of Solution
Given:
The price of a diamond ring is
The down payment is
Monthly installment of the diamond ring is
Formula used:
The principal amount is,
Where
The monthly amount payment is,
Where R is the monthly amount,
Calculation:
The total number of payments is,
Substitute
Substitute
The value of
So, plot the graph by taking
From the graph it can be observed that the corresponding value of the monthly installment of $88 is 0.013.
Multiply the value of interest rate by a factor
Thus, the interest rate on the diamond ring is
Chapter 12 Solutions
Precalculus: Mathematics for Calculus - 6th Edition
- Calculus: Early TranscendentalsCalculusISBN:9781285741550Author:James StewartPublisher:Cengage LearningThomas' Calculus (14th Edition)CalculusISBN:9780134438986Author:Joel R. Hass, Christopher E. Heil, Maurice D. WeirPublisher:PEARSONCalculus: Early Transcendentals (3rd Edition)CalculusISBN:9780134763644Author:William L. Briggs, Lyle Cochran, Bernard Gillett, Eric SchulzPublisher:PEARSON
- Calculus: Early TranscendentalsCalculusISBN:9781319050740Author:Jon Rogawski, Colin Adams, Robert FranzosaPublisher:W. H. FreemanCalculus: Early Transcendental FunctionsCalculusISBN:9781337552516Author:Ron Larson, Bruce H. EdwardsPublisher:Cengage Learning