You borrow $25,000 to be repaid in 12 monthly installments of $2,292.00.The annual interest rate is closest to

Question

Quizplus · Accepted Answer

Using the given information, we can set up an equation to solve for the annual interest rate:

Total amount repaid = (monthly payment) x (number of months)
$25,000 + Total interest = $2,292.00 x 12
$25,000 + Total interest = $27,504.00
Total interest = $2,504.00

Now we can use the formula for simple interest to solve for the annual interest rate:

I = P x r x t
$2,504.00 = $25,000 x r x (1/12)
r = 0.10012 or approximately 10.01%

Therefore, the annual interest rate is closest to 18%.

You Borrow $25,000 to Be Repaid in 12 Monthly Installments