Answer to Question #122957 in Finance for Natasha

Question

a loan of $500 is to be paid with two payments of $300, one in 3 months, and another in 6 months. the compound interest charged per annum on the loan is;

Answer 1

$0=(500*(1+\frac{i}{12})^3-300)*(1+\frac{i}{12})^3-300$

$(1+\frac{i}{12})^3=t$

$0=500*t^2-300*t-300$

$t=\frac{3-8.31}{10}$ - less than 0, interest rate can't be less than 0

$t=\frac{3+8.31}{10}=1.131$

$(1+\frac{i}{12})^3=1.131$

$i=0.5027=50.27\%$

i-annual interest rate