If a loan of $125,000 is for 10 years, and the interest rate paid was $65,625, what is the in treat rate on the loan?

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Mathematics

Paola Oneill

27 May, 18:22

If a loan of $125,000 is for 10 years, and the interest rate paid was $65,625, what is the in treat rate on the loan?

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Vaughan · Answer 1

For this problem you simply are solving for a different variable. we use the equation F=p (1+r) ^T (assuming that the interest is compounded once a year). p=125,000 T=10 and we can add the interest plus the initial to get the final and find F=180,625. plug all these in and you get 180,625=125000 (1+r) ^10. solve for r in that equation and you get r=3.75%

if you want the work to solve the equation, first divide 180,625 by 125,000 and then take the quotient of that and put it to the 1/10 power. then minus 1 to solve for r (sorry for making it brief, it is a lot of numbers to type otherwise).