24. You are in the market for a new, high performance wind surfing board. A dealer...

 

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24. You are in the market for a new, high performance wind surfing board. A dealer offers you financing on the $1,500 you need to buy the board at a "low 10 % annual interest rate "for 24 months. Your payments are determined as follows: Annual interest = 10% of $1,500 = $150 per year Total due principal + two years interest = $1,500 + 2($150) =$1,800 Monthly Payment = $1,800/24 months = $75 per month This procedure is called "add on" interest. What is the actual annual interest rate being charged on this loan? 24. You are in the market for a new, high performance wind surfing board. A dealer offers you financing on the $1,500 you need to buy the board at a "low 10 % annual interest rate "for 24 months. Your payments are determined as follows: Annual interest = 10% of $1,500 = $150 per year Total due principal + two years interest = $1,500 + 2($150) =$1,800 Monthly Payment = $1,800/24 months = $75 per month This procedure is called "add on" interest. What is the actual annual interest rate being charged on this loan?

Answer rating: 100% (QA)

charged taking into account the addon interest method The addon interest method is a simple interest ... View the full answer