Compound Interest and Time Value of Money
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I just need to know how to take this equation A=P(1+r/365)^n and solve it for r this is what I came up with ((A/P)^1/n-1)365=r which though was right but when I plugged the numbers from the next part of the question the answers were not coming out right can you tell me if my equation for r is correct.
Here is the question:
Star financial Corp. offers short term loans as shown in the accompanying advertisement. If you borrow P dollars for n days at the annual percentage rate r, then you pay back A dollars where
A=P(1+r/365)^n
A. Solve the formula for r in terms of A,P, and n.
B. Find the annual APR for each of the loans in the ad.
Borrow You pay back
$200 $229
$300 $339
$400 $449
*if loan is paid out within 30 days
thus with the equation i got from solving for r this is how I plugged in the numbers
((229/200)^1/30-1)365=r that when I solved for came out to 1.65% for the APR which didn't seem right. Could you help me is it my equation for r or am I pulling the wrong information out of the problem to solve for the APR?
Thank you.
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Solution Summary
Compound interest and the time value of money are investigated in the following posting.
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