Question

In the monthly payment formula M
Pr(1+r
what value do you give rif the
(1+r)" -1'
interest rate is 8.9%?

A. 0.74

B. 0.0074

C. 0.74

D. 0.0089​

Answer 1

Answer:

0.74 is the correct answer

Answer 2

Given :  monthly payment formula

interest rate  r  = 8.9 %

To Find : Value of r

Solution:

P = (1  + r)ⁿ - 1

Case  1 : Interest Rate is 8.9 % per annum

Then first convert it in monthly

= 8.9/12  %

= 0.74 %

then divide by 100 to remove %

= 0.74/100

= 0.0074

r = 0.0074

Case  2 : : Interest Rate is 8.9 % per month

Then just divide by 100 to remove %

= 8.9/100

= 0.089

From the given options only  0.0074 matches .

Hence Case 1 is correct  

Correct answer is 0.0074

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