Answer:
Amount financed states that the actual amount of credit made available to a borrower in a loan.
Given:
Amount Financed (m) = $3,500, Number of payment per year(y) = 12
and number of payments(n) = 36
36 payments of $104.50 each.
First calculate the total number of payments;
36 payments of $ 104.50 each
Total payment = [tex]\$ 104.50 \times 36= \$3,762[/tex]
Solve for c;
Total interest(c) = Total payments - Amount financed(m)
substitute the values of m and total payments above;
c = $3,762 -$3500 = $ 262
Therefore, the value of c = $ 262
To find I(Interest rate)
use formula I = [tex]\frac{2yc}{m(n+1)} \times 100[/tex]
Substitute the value of y,c , m, and n in above to solve for I;
[tex]I = \frac{2\times 12 \times 262}{3500 \times (36+1)}\times 100[/tex]
Simplify:
I = 4.8 %(nearest tenth)
therefore, the interest rate (I) is ; 4.8 %
