You take out a cash advance of $1000 on a credit card. After 3 months, you owe $1058.35. The interest is compounded monthly. What is the annual interest rate for this cash advance? (Round to one decimal place.)
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i'm not much better...i'm just hoping for the best...i didn't go to a class this morning because of one of the assignements...when i got to the other class everyone it seemed was for some reason 'nice'...well not everyone but people who normally don't talk to me laughing and talking nice...that usually happens when they figure they have one on my head...either something the lecturer said(cause i know that particular one don't like me-this place full of racism you know)...or it's just because they glad i couldn't make class...oh well, what can i do...
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F= P(1+(r/m))^(mn), where m is the number of years and n is the number of interst periods per year, and r = nominal interest rate
what you desire is the effective interst i
thus from info, F=1058.35;P = 1000
thus we have 1058.35 = 1000(1+(r/m))^mn
since its compounded monthly and for only 3 months, n=1 yr and m = 3
so solving for r we obtain: 0.0573
to obtain i use: i = [(1+(r/m))^m]-1 substituting values then solving we get: 0.0584 or 5.84%
had explained in more detail the first time but i hope this is helpful..