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What is the nominal annual rate of interest compounded monthly on a lease valued at $23,700.00,...

What is the nominal annual rate of interest compounded monthly on a lease valued at $23,700.00, if payments of $6200.00 are made at the beginning of every six months for 2 years?

The nominal annual rate of interest is ____​%.

​(Round to two decimal places as​ needed.)

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Answer #1

NPER = 2*2 = 4

Payment = 6200

Present Value = 23700

Present Value = Payment + Payment/(1+semi-annual rate)^1 + Payment/(1+semi-annual rate)^2 + Payment/(1+semi-annual rate)^3

23700 = 6200 +6200/(1+semi-annual rate)^1 +6200/(1+semi-annual rate)^2 +6200/(1+semi-annual rate)^3

We will use the heat and trial method to get that value for which the above equation satisfies.

Semi-annual Rate = 3.11%

Annual Rate = 6.22% Answer

Please let me know in case you have any queries and I will be happy to assist you.

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