ATAR Notes: Forum
VCE Stuff => VCE Mathematics => VCE Mathematics/Science/Technology => VCE Subjects + Help => VCE General & Further Mathematics => Topic started by: Angelz369 on November 02, 2011, 01:19:48 am
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Brad purchases a bed for $1100. he pays a deposit of $300 and quarterly repayments of $230 for one year. The effective interest rate that Brad will be paying is approximately:
Answer = 24%
The working on the solutions says:
Brad pays a total of 300 + 4x230 = $1220
Total interst = 1220 - 1100=$120 interest
Flate rate of interest = (120x100/800) = 15%
I get everything and how to find effective rate but I don't get the flate rate of interest calculation!!
Why is it only dividing by $800?? aren't you meant to also times it by the number of years so since it's quarterly repayments don't you multiply 800 with 1/3?
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Flat rate of interest is:
(100 * I) / (P * T);
* where I interest is 1220 - 1100 = $ 120
* where P is the principle (we never include the deposit as part of the principle in hire purchase. So 1100-300 = 800)
* where t is how many years? Note, this is different from "n" (n meaning how many payments?). So T is 1 for one year
Thus the equation becomes,
(100* 120) / (800 * 1) = 15 % flat rate
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Flat rate of interest is:
(100 * I) / (P * T);
* where I interest is 1220 - 1100 = $ 120
* where P is the principle (we never include the deposit as part of the principle in hire purchase. So 1100-300 = 800)
* where t is how many years? Note, this is different from "n" (n meaning how many payments?). So T is 1 for one year
Thus the equation becomes,
(100* 120) / (800 * 1) = 15 % flat rate
oohh ok thanks!!