X Problem 5-37 (algorithmic) Question Help The EZ Credit Company offers to loan
ID: 2793156 • Letter: X
Question
X Problem 5-37 (algorithmic) Question Help The EZ Credit Company offers to loan a college student $6,100 for school expenses. Repayment of the loan will be in monthly installments of $306.44 for 24 months. The total repayment of money is $7,354.56, which includes the original $6,100, $1,225.48 in interest charges, and $29.08 for a required life insurance policy covering the amount of the loan. Assume monthly compounding of interest. What nominal interest rate is being charged on this loan? The nominal interest rate that is being charged on this loan is 1 % per year. (Round to two decimal places.)Explanation / Answer
Original Loan amount = $6100
Life insurance Policy = $ 29.08
So PV of loan = $ 6129.08
Number of periods= 24 Months
Monthly instalments(PMT) = $ 306.44
Interest rate = rate(24,-306.44,6129.08) = 1.51% per month = 18.12 % per year
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