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find interest rate

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find interest rate

by dikku07 » Thu Jun 04, 2009 12:18 pm
Hi folks,
I'm posting this to know a better and shorter way to calculate this kind of problems. I think the way, I tried, I did get right OA but method was too lengthy to do on a test. just want to know if some qauant genius on forum can show a better way to do this problem. Thanks


A car is available at $6400 or for $1400 cash down payment and five monthly instalments of $1030 each. Calculate the rate of interes charged under the instalment plan.
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by Osirus@VeritasPrep » Thu Jun 04, 2009 12:24 pm
you would do something like

(Q-D)/D

where Q = new value after markup

D = original value before markup

I think this should give you

6550-6400/6400
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by SanjeevK » Thu Jun 04, 2009 12:57 pm
The total amount of money paid for installment : 1030x5 = 5150
Hence extra amount of money paid using installment plan = 1400 + 5150 - 6400 = 150.
Assuming we are calculating simple interest
150 = [(6400 - 1400) x r x 5]/[12x100]
This gives r = 7.2 %
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by dikku07 » Thu Jun 04, 2009 1:14 pm
OA is 12.24%
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