Question

10) You have just taken out an 8-year, $14,000 loan to purchase a new car. This loa is to be repaid in 96 equal end-of-month installments. If each of the monthly installments is $200.00, what is the effective annual interest rate on this car loa

Answer 1

Ans 8.29%

P =	Regular Payments
PV =	Loan Amount
r =	rate of interest
n =	no of periods
P =	r (PV)
	1 - (1 + r )-n
200 =	(r%/12)*14000
	1 - (1 / (1 + r%/12)^96))
200 / 14000 =	(r%/12)
	1 - (1 / (1 + r%/12)^96))
0.014285714285 =	(r%)
	1 - (1 / (1 + r%)^96))
r =	8.29%