I am using a loan calculator to find out the loan amount I will be receiving to buy the car, but in order to do that I need to calculate the interest rate. I am having trouble calculating the interest rate for the car I chose. I went with continuous compounding formulas and tried using both A= P(1+i)^n and
A= P(1+(r/m))^r(t), but could not come up with the right answer. For the method A= P(1+i)^n, I tried equating A= 15,998 (price of my car) and P= 16,000 (the amount of the loan), and vice versa, n= 3*12 (3 years, 12 compounding periods within each year) and then I solved for i. I didn't get a reasonable answer; it was something raised to a negative power. For
A= P(1+(r/m))^r(t), I did pretty much the same as the first, however I divided my final answer to solving r by 12; again, I came up with an unreasonable answer.
I do not know whether or not I am using the wrong numbers, formula, or if I am missing something, but I have tried several times, switching the numbers several times to unsuccessfully find the answer. I even tried Pe^rt, but I didn't think I was on the right track at all.
Any help would be much appreciated.
PS- For your reference, this is the car I went with. http://www.carmax.com/enus/view-car...b-2c8cc0dbbfb2&Ep=search:results:results page
Thank you in advance.
A= P(1+(r/m))^r(t), but could not come up with the right answer. For the method A= P(1+i)^n, I tried equating A= 15,998 (price of my car) and P= 16,000 (the amount of the loan), and vice versa, n= 3*12 (3 years, 12 compounding periods within each year) and then I solved for i. I didn't get a reasonable answer; it was something raised to a negative power. For
A= P(1+(r/m))^r(t), I did pretty much the same as the first, however I divided my final answer to solving r by 12; again, I came up with an unreasonable answer.
I do not know whether or not I am using the wrong numbers, formula, or if I am missing something, but I have tried several times, switching the numbers several times to unsuccessfully find the answer. I even tried Pe^rt, but I didn't think I was on the right track at all.
Any help would be much appreciated.
PS- For your reference, this is the car I went with. http://www.carmax.com/enus/view-car...b-2c8cc0dbbfb2&Ep=search:results:results page
Thank you in advance.