Problema Solution
Acme Plumbing borrowed $5000 to buy a new pipe threader. The loan is to be paid back in 60 monthly installments of $106. Use the constant ratio formula to find the annual percentage rate on the loan, correct to the nearest tenth of a percent.
Answer provided by our tutors
Interest = $106*60-$5000 = $1360
60 months = 5 yrs
Annual ratio is r
5000*5*r = 1360
r = 5.44%
So the annual percentage rate on the loan is 5.44%