John bought a used truck for $4,500 he made an agreement with the dealer to put $1,500 down and mae payments of $350 for the next 10 months the extra cost paid by taking this deal is equivalent to what actual yearly rate of interest

Question

Mathematics

Dalia Carrillo

1 July, 04:41

John bought a used truck for $4,500 he made an agreement with the dealer to put $1,500 down and mae payments of $350 for the next 10 months the extra cost paid by taking this deal is equivalent to what actual yearly rate of interest

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Answers (1)

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Farley · Answer 1

Ist amount paid = $1500

Making $350 for 10 months = 10*350 = $3500

Total amount paid = 1500 + 3500 = 5000

So an amount of $5000 was paid to cover the cost of $4500 within the 10 month period.

I = PRT

Interest, I = 5000 - 4500 = 500

Time, t = 10 months = 10/12 = (5/6) year.

Principal P = 4500

R = I / (PT)

R = 500 / (4500*5/6)

R = (500*6) / (4500*5)

R = 0.1333 ...

R ≈ 13.33 % per annum.