You borrow $16,000 from your friend. Your friend asks you to pay $421.34 every month for...

Question

Question

You borrow $16,000 from your friend. Your friend asks you to pay $421.34 every month for the next 4 years. What is the interest rate on this loan

1. type of problem.

2. Write formula identifying the rate and term in the factor.

3. Solve with a complete formula.

business finance

Answer 1

Answer #1

Q) You borrow $16,000 from your friend. Your friend asks you to pay $421.34 every month for the next 4 years. What is the interest rate on this loan

Solution

Loan taken= 16000 (PV)

FV= 421.34*(4*12) (421.34 Monthly payment for 4 year )

FV= 20224.32

Time: 4 years

Rate= ?

Solution using EXCEL and formula is mention in Fx bar

B5 丘 -RATE(84,,-82, B3,0) 2 PV IV 4 TIME 51 RATE 16000 20224.34 4 | 6.032961

Answer is 6.032%

Add a comment

Answer 2

Similar Homework Help Questions

8. A friend asks to borrow $49 from you and in return will pay you $52...

8. A friend asks to borrow $49 from you and in return will pay you $52 in one year. If your bank is offering a 5.9% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $49 instead? b. How much money could you borrow today if you pay the bank $52 in one year? c. Should you loan the money to your friend or deposit it in the bank?
A friend asks to borrow $47 from you and in return will pay you $50 in...

A friend asks to borrow $47 from you and in return will pay you $50 in one year. If your bank is offering a 5.6% interest rate on deposits and loans: a. How much would you have in one year if you deposited the $47 instead? b. How much money could you borrow today if you pay the bank $50 in one year? c. Should you loan the money to your friend or deposit it in the bank? a. How...
A friend asks to borrow $53 from you and in return will pay you $56 in...

A friend asks to borrow $53 from you and in return will pay you $56 in one year. If your bank is offering a 5.7% interest rate on deposits and loans a. How much would you have in one year if you deposited the $53 instead? b. How much money could you borrow today if you pay the bank $56 in one year? c. Should you loan the money to your friend or deposit it in the bank? a. How...

1. A friend asks to borrow $57 from you and in return will pay you $60...

1. A friend asks to borrow $57 from you and in return will pay you $60 in one year. If your bank is offering a 6% interest rate on deposits and loans: (a) How much (in $) would you have in one year if you deposited the $57 instead? (Round your answer to the nearest cent.) (b) How much money (in $) could you borrow today if you pay the bank $60 in one year? (Round your answer to the...
show work please Borrowing $10 Per Month We continue with the same example: you borrow $10 per month from your friend. On each of these loans, your friend charges 30% Amount loan atthe year S10 Numbe...

show work please Borrowing $10 Per Month We continue with the same example: you borrow $10 per month from your friend. On each of these loans, your friend charges 30% Amount loan atthe year S10 Number ofowed on Loan amount Month months of interest end of thein interest per year, compounded monthly Determining the total amount that you owe at the end of one year will require a few steps $10 $10 $10 $10 $10 $10 $10 $10 $10 $10...
A friend wants to borrow money from you. He states that he will pay you $3,900...

A friend wants to borrow money from you. He states that he will pay you $3,900 every 6 months for 7 years with the first payment exactly 7 years and six months from today. The interest rate is 6.2 percent compounded semiannually. What is the value of the payments today?

A friend wants to borrow money from you. He states that he will pay you $2.800...

A friend wants to borrow money from you. He states that he will pay you $2.800 every 6 months for 10 years with the first payment exactly 6 years and six months from today. The interest rate Is an APR of 51 percent with semiannual compounding. What is the value of the payments today? Multiple Choice $32,23430 S23166 33519 o $32.4470 o 5301301
b) You have your choice of two short term loan options. You can borrow $10,000 at...

b) You have your choice of two short term loan options. You can borrow $10,000 at an interest rate of 2% per month. Or you can borrow $10,000 at a compound annual interest rate of 10%. If you expect to pay back the loan 6 years from now, which loan option will you take to minimize the amount of interest you are charged. [2 points)
You need $300,000 to buy a house. You decide to borrow money from the bank to...

You need $300,000 to buy a house. You decide to borrow money from the bank to finance your mortgage. Assume that the bank charges a fixed annual interest rate of 4.50 percent and the term of the loan is 30 years. If you are required to make an equal payment every year for 30 years to pay off the loan, what is the annual payment? (Note that banks typically require monthly mortgage payments. For this problem, however, lets assume for...

4. You are about to borrow $16,000 from a bank at an interest rate of 7%...

4. You are about to borrow $16,000 from a bank at an interest rate of 7% compounded annually. You are required to make five equal repayments in the amount of $3,500 per year, with the first repayment occurring at the end of year 1. a. Show the interest payment and principal payment in each year. b. How much is still owing at the end of year 5? c. What annual payments would be required to completely pay off the loan...