Answer: 8.4 %
Step-by-step explanation:
Since, the monthly payment formula,
[tex]P = \frac{r(PV)}{1-(1+r)^{-n}}[/tex]
Where, PV is the present value of the loan,
r is the rate per period,
n is the number of periods,
Here, PV = $ 80,000
P = $ 600
n = 12 × 30 = 360
Let r be the annual rate ,
⇒ [tex]600 = \frac{\frac{r}{12}\times 80,000}{1-(1+\frac{r}{12})^{-360}}[/tex]
⇒ [tex]600 = \frac{\frac{80000r}{12}}{1-(1+r/12)^{-360}}[/tex]
⇒ [tex]600(1-(1+\frac{r}{12})^{-360}) = \frac{80,000r}{12}[/tex]
⇒ [tex]r = 0.082[/tex]
Thus, the annual rate of interest = 0.082 = 8.2 %
