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5th Year Maths Problem - Help!

  • 22-02-2013 10:19am
    #1
    angs77
    Closed Accounts Posts: 81 ✭✭


    car package loan

    a ten year loan with total interest = 15%
    calculate apr

    can anyone figure it out.

    this is all that appear in the maths book.


Comments

  • #2
    aarond280
    Registered Users, Registered Users 2 Posts: 275 ✭✭aarond280


    angs77 wrote: »
    car package loan

    a ten year loan with total interest = 15%
    calculate apr

    can anyone figure it out.

    this is all that appear in the maths book.
    I could be wrong, but if you let (1+0.15)=(1+r)^10 ... r is the annual rate
    (1.15)^(1/10)=1+r
    (1.15)^(1/10)-1=r
    r=0.014
    r=1.4%


  • #3
    angs77
    Closed Accounts Posts: 81 ✭✭angs77


    the answer is perfect, but I don't understand the use of ^

    can you explain further... Please :)


  • #4
    Leaving Cert Student
    Registered Users, Registered Users 2 Posts: 1,026 ✭✭✭Leaving Cert Student


    angs77 wrote: »
    the answer is perfect, but I don't understand the use of ^

    can you explain further... Please :)
    ^ means to the power of


  • #5
    MathsManiac
    Registered Users, Registered Users 2 Posts: 1,595 ✭✭✭MathsManiac


    But the question is poorly phrased, if you have really given it as it is in the book. That answer of 1.4% is only correct in the case where all of the money borrowed and the interest is to be paid off in one lump sum at the end.

    e.g., the car retails for €10,000, and the loan deal is that you pay nothing for ten years and then give them €11500.

    If you were paying, say, €1150 at the end of every year for ten years, the total interest would still be 15%, but in this case the APR would be different from the first case.


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