You want to borrow $77,000 from your local bank to buy a new sailboat. You can a

Question

You want to borrow $77,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,300, but no more.

Assuming monthly compounding, what is the highest rate you can afford on a 78-month APR loan? (Round your answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

You want to borrow $77,000 from your local bank to buy a new sailboat. You can afford to make monthly payments of $1,300, but no more.

Explanation / Answer

Calculate interest in the excel using the formula as follows

=RATE(78,-1300,78000,0,0)

Here 78 is number of payments made

1300 is the payment made each month

78000 is the present value of the loan

We get rate as 0.70%

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