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Thread: Interest rate calculator: $50200 loan is repaid by 28 payments of $4700 each

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    Red face Interest rate calculator: $50200 loan is repaid by 28 payments of $4700 each

    Hi, could someone please help my with a problem
    A $50200 loan is repaid by 28 payments of $4700 each at the end of year, followed by 10 payments of $4300 each at the beginning of the month. What interest rate (i1) is being charged?

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    Quote Originally Posted by eap View Post
    Hi, could someone please help my with a problem
    A $50200 loan is repaid by 28 payments of $4700 each at the end of year, followed by 10 payments of $4300 each at the beginning of the month. What interest rate (i1) is being charged?
    Clarify what happens at end of 28th year:
    is the $4700 received on Dec.31, then $4300 on Jan.1st (1 day later),
    or is the 1st $4300 received on Feb.1st?

    Regardless, the interest rate cannot be calculated directly:
    numeric method required.

    If rate = 9.25%, then close to $2500 will remain owing,
    IF 1st monthly payment is 1 month after last annual payment.

    Hope that helps.
    I'm just an imagination of your figment !

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    Elite Member stapel's Avatar
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    Cool

    Quote Originally Posted by eap View Post
    A $50,200 loan is repaid by 28 payments of $4,700 each at the end of year...

    So, for each of twenty-eight years, payments of $4,700 is made on 31 December?

    Quote Originally Posted by eap View Post
    ...followed by 10 payments of $4300 each at the beginning of the month.
    So the twenty-ninth payment is made on 01 January of the twenty-ninth year, in the amount of $4,300? And the last payment, in the amount of $4,300, is made on 01 October of that same year?

    Quote Originally Posted by eap View Post
    What interest rate (i1) is being charged?
    What formula did they give you, from which you obtained the variable "i1"? How far have you gotten in plugging into that formula?

    Please be complete. Thank you!

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    Quote Originally Posted by Denis View Post
    Clarify what happens at end of 28th year:
    is the $4700 received on Dec.31, then $4300 on Jan.1st (1 day later),
    or is the 1st $4300 received on Feb.1st?

    Regardless, the interest rate cannot be calculated directly:
    numeric method required.

    If rate = 9.25%, then close to $2500 will remain owing,
    IF 1st monthly payment is 1 month after last annual payment.

    Hope that helps.
    Hi, 9.25 is the right answer, thanks a lot!!
    If you could send me the method you used to solve this problem I would really appreciate it!!

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