You want to borrow $100,000 from your local bank to buy a new sailboat. You can...

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You want to borrow $100,000 from your local bank to buy a new sailboat. You can...

You want to borrow $100,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,750, but no more. Assuming monthly compounding, what is the highest rate you can afford on a 72-month APR loan?

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Answer 1

Answer #1

PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]

C = Cash flow per period

i = interest rate

n = number of payments

100000= 1750*((1-(1+ Interest rate/1200)^(-6*12))/(Interest rate/1200))

Interest rate% = 7.93

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Answer 2

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