Celeste just borrowed 31,500 dollars. She plans to repay this loan by making equal quarterly payments of 1718.3 dollars for 24 quarters. If she makes her first quarterly payment later today, then what is the quarterly interest rate on the loan?
Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
Ans:- In this question, we need to find the rate of the loan. we will use the RATE function of excel to find the answer.
Nper=24, Pmt= -$1,718.30 PV= -$31,500, FV=0, TYPE = 1
Note:- Put TYPE=1, when Payment or Investment is done at the start of the period and Put TYPE=0, when it is done at the end of the period.
Therefore, the quarterly rate of the loan is 0.0250.
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