Explore BrainMass
Share

Explore BrainMass

    Nominal and effective annual interest rate

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Your child's orthodontist offers you two alternative payment plans. The first plan requires a $4,000 immediate up-front payment. The second plan requires you to make monthly payments of $139.68, payable at the end of each month for 3 years. What nominal and effective annual interest rate is built into the monthly payment plan?

    © BrainMass Inc. brainmass.com October 10, 2019, 12:44 am ad1c9bdddf
    https://brainmass.com/business/interest-rates/nominal-and-effective-annual-interest-rate-304944

    Solution Preview

    The intrest rate would be such that the present value of the monthly periods would equal to upfront payment of $4,000. Therefore $4,000 ...

    Solution Summary

    The solution explains how to calculate the nominal and effective annual interest rate

    $2.19