Your child\'s orthodontist offers you two alternative payment plans. The first p

Question

Your child's orthodontist offers you two alternative payment plans. The first plan requires a $4,000 immediate up-front payment. The second plan requires you to make monthly payments of $137.41, payable at the end of each month for 3 years. What nominal annual interest rate is built into the monthly payment plan?

I know the answer is :14.36%

I would really like to know the steps that it took to get to that answer. If you could please show your work that would be greatly appreciated.


Your child's orthodontist offers you two alternative payment plans. The first plan requires a $4,000 immediate up-front payment. The second plan requires you to make monthly payments of $137.41, payable at the end of each month for 3 years. What nominal annual interest rate is built into the monthly payment plan?

I know the answer is :14.36%

I would really like to know the steps that it took to get to that answer. If you could please show your work that would be greatly appreciated.

Explanation / Answer

4000 = 137.41*PVIFA(x, 36)

solve for x

x = 1.196%

annual = 1.196*12 = 14.36%

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