On January 1, Jin owed a debt of $12,104. An agreement was reached that she would pay the debt plus compound interest in 24 monthly installments of $560, the first payment to be made at the end of January. What rate of annual interest is she paying?
On January 1, Jin owed a debt of $12,104. An agreement was reached that she would pay the debt plus compound interest in 24 monthly installments of $560, the first payment to be made at the end of January. What rate of annual interest is she paying?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Computing
Answer the questions to the following four separate scenarios.
- For #1 to #3, round your answer to the nearest whole dollar.
- For #4 and #5, round percentage to two decimal places (for example, enter 8.54 for 8.5444%).
- Do not use a negative sign with your answer.
| On January 1, Jin owed a debt of $12,104. An agreement was reached that she would pay the debt plus |
Answer |
Expert Solution
Step 1:
To calculate annual interest rate, we will use present value of annuity concept.
Given data;
debt amount = present value of annuity = $ 12,104
number of payments = 24
payment amount = $560
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