A certain college graduate borrows 7406 dollars to buy a car. The lender charges interest at an annual rate of 20%. Assuming that interest is compounded continuously and that the borrower makes payments continuously at a constant annual rate k dollars per year, determine the payment rate that is required to pay off the loan in 3 years. Also determine how much interest is paid during the 3-year period.

A certain college graduate borrows 7406 dollars to buy a car. The lender charges interest at an annual rate of 20%. Assuming that interest is compounded continuously and that the borrower makes payments continuously at a constant annual rate k dollars per year, determine the payment rate that is required to pay off the loan in 3 years. Also determine how much interest is paid during the 3-year period.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter5: Introduction To Business Expenses

Section: Chapter Questions

Problem 61P

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Calculating the Return On A Loan

Question

A certain college graduate borrows 7406 dollars to
buy a car. The lender charges interest at an annual
rate of 20%. Assuming that interest is
compounded continuously and that the borrower
makes payments continuously at a constant annual
rate k dollars per year, determine the payment
rate that is required to pay off the loan in 3 years.
Also determine how much interest is paid during
the 3-year period.

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