Originally Posted by
TKHunny Since 'x' is not in the equation, I guess it can be anything you like!
NonTrivial exercise. Try this:
1) Solve for one fo the 'r's and take a good guess.
$\displaystyle f(r) = r = \frac{50}{575}\left[1 - \frac{1}{(1+r)^{12}}\right]$
You THINK the answer might be around 8% Annual, so give a good try of r = 0.006434
f(0.006434) = 0.006441 -- I am delighted that it was so close. Do it again.
f(0.006441) = 0.006448 -- A little disappointing. It moved 7. Do it again.
f(0.006448) = 0.006455 -- Ack. It moved 7 again!
Well, it's not winning any awards for convergence, but it is getting there. Get a computer program to do more iterations. After a few hundred, it settles down to r = 0.00660 91533 89984 (Sorry, I don't know how to shut off Skype) which leads to an annual rate of around 8.225725%.
That's one way to go about it. There are others.