an easy problem ive forgotten how to do (1 Viewer)

[SaMB0Y]

i got my trials 4 maths 2moro.. feeling reasonably confident but doing some revision in arranging credit becuz i havnt dun it since the begining of the year.. whats the formula to find the interest rate when u kno the repayments and all the other information.. i can do everything else when i have the interest rate ive just forgotten how to work backwards
e.g.
a fridge cost $1100 or $200 deposit + $47.50 per month for 2 years. what would be the annual flat rate of interest charged??

 

[jayraad]

Hi, sorry nobody replied before you exam however i will supply you with the solution below: (note: flat rate = simple interest formula).

47.50x24=$1140. This is how much they will repay in the 2 years.
Now $1140+$200deposit =$1340

Now use the Simple interest formula which is I=PxRxN
I=$1340-$1100= $240
P= $1100
R=?
n=2

240=1100xRx2

To solve for 'R' you do 1100x2= 2200 therefore 240=2200xR
now make 'R' the subject. So 240/2200=0.1091 now you times that answer by 100 to get as a percentage so 0.1091x100=10.91%

I hope thats right loll. Anyways if you dont understand the solution i can try re-explain it, Good luck.

 

[PC]

i got my trials 4 maths 2moro.. feeling reasonably confident but doing some revision in arranging credit becuz i havnt dun it since the begining of the year.. whats the formula to find the interest rate when u kno the repayments and all the other information.. i can do everything else when i have the interest rate ive just forgotten how to work backwards
e.g.
a fridge cost $1100 or $200 deposit + $47.50 per month for 2 years. what would be the annual flat rate of interest charged??

Actually Jayraad is not quite right and has made a VERY common mistake, by including the deposit as part of the principal.

Cost of fridge = $1100
Deposit = $200
So amount owing AFTER deposit is paid = 1100 - 200 = $900
This is the amount which is still owing, which is the amount "borrowed", which is the amount upon which interest will be charged.

Now Total paid for fridge = Deposit + Payments
= 200 + (47.50 x 24)
= $1340
So Interest = 1340 - 1100
= $240

Now use I = Prn
240 = 900 x r x 2
240 = 1800r
r = 240/1800
= 0.1333333
= 13.3%

Remember that the $47.50 monthly payment is made up of part of the $900 still owing and also repays part of the interest charged.