Question

Noel Devine bought a new dishwasher for $320. He paid 20 down and made 10 monthly payments of $34 what actual yearly interest rate did Noel pay?

Answer 1

First we need to find the amount financed, total payments and total interest

Amount financed
320-20=300

Total payments
34×10=340

Total interest=total payments-amount financed
Total interest=340-300=40

Now to find the yearly interest rate use the formula of
I=(2yc)÷(m×(n+1))
I ?
Y number of months in a year 12
C total interest 40
M amount financed 300
N number of payments 10
I=(2×12×40)÷(300×(10+1))
I=0.2909×100=29.09%

Hope it helps!

Answer 2

IN finding the interest we need to use the following formula:
 Interest= Principal x Rate x Time  or I= PRT
Substitute values: I= [$20 + ($10 x $34)] -320 =$40
P= $320
R=?
T=10 months/year
I=PRT
Since R is a missing term, we will solve for R using this formula: R=I/PT
R=  [$20 + ($10 x $34)-320] / ($320 x 10 months)
                                          T=10 months÷12 months=0.83
R= ($40)/ $320 X 0.83
R= 40/ 265.6
R=15.06024096