- #1
Shakattack12
- 24
- 2
Homework Statement
The problem ask to calculate the interest rate of a loan. The principal is $735 000, term is 25 years (300 months), and the repayments due is $4656.17/month.
i = interest rate, PV = present value, R = repayments
Homework Equations
PV = R x [(1+i/12)^300 - 1]/(i/12)
The Attempt at a Solution
I managed to calculate the total interest to pay = $661 851
735000 = 4656.17 x [(1+i/12)^300 - 1]/(i/12)
13.155 = [(1+i/12)^300 - 1]/i
13.155i = [(1+i/12)^300 - 1]
13.155i + 1 = (1+i/12)^300
I realized that this may not be correct but I have no idea of what to do. I put this into an online calculator and it gave a value of 5.823% but I don't know how it got to it. Please help.