Amortization of a Loan, I thought 4% was the answer but it is not! please help m

Question

Amortization of a Loan, I thought 4% was the answer but it is not! please help me

P Do Homework - Cynthia Davis Google Chrome https://www.mathxl.com/Student/PlayerHomework.aspx?homeworkid-305108572&questionId;=6&flushed-false;&cld; = 3435897&center; Cynthia Davis 10/20/15 12:51 PM Homework: 10.3 (hw) Amortization of Loans Overview Bus Econ 10.3.14 Ex. Score: O of 1 pt HW Score: 91.67% (11 of 12 pts) 12 of 12 complete A loan with a quarterly payment of $1,440 has an unpaid balance of $11,000 after 36 quarters and an unpaid balance of $10,000 after 37 quarters. If interest is compounded quarterly, find the interest rate Help Me Solve This h View an Example The annual interest rate is Textbook Ask My Instructor Print More Enter your answer in the answer box, then click Check Answer All parts showing Clear All Check Answer Save

Explanation / Answer

Principal loan amount outstanding after 36 quarters = $11,000

Quarterly payment = $1,440

Principal loan amount outstanding after 37 quarters = $10,000

therefore, payemtn towards principal= $1,000 ($11,000-$10,000)

payment towards interest= $440

% on principal outstandning (paid quarterly) = 440/11,000 = 4%

Since the question requires us to calculate annual rate of interest compounded quarterly, we shall multiply 4% by 4= 16% compounded quarterly.

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