Peter buys a ski vacation package priced at $2754. He pays$350 down and finances the balance at $147 per month for 1.5 years. Determine the annual interest rate, compounded monthly, being charged. The only financial question in my text book that i could not solve. Any help would be appreciated. Thanks! 2. 350 was paid straight away so no interest acted upon it.so he needed to pay 2404. 147 for 1.5yrs=18months is 147(18)=2646 so$\displaystyle 2404(1+\frac{r}{12})^{12(1.5)}=2646$solving for r gives you the annual interest rate compounded monthly 3. (1+ r/12)^18=1.1 (1+r/12)= 18 x sq rt of 1.1 r/12= 1.005 -1 r= 0.005 x 12 (am i going the right direction?) so the interest rate compounded monthly is approximately 6%?? Tvm for the quick reply. =) 4. yep about 6.4% 5. I don't follow/understand what BOTH of you are doing Formula for loan payments: P = Ai / (1 - k) where k = 1 / (1+i)^n P = payment (147) A = amount borrowed (2404) n = number of months (18) i = monthly rate (?) That CANNOT be solved directly: iteration is required. The rate will be ~12.357% annual, cpd monthly. All I can say is look up "iteration" or get teacher to demonstrate; can't teach that here! 6. lol Wilmer, i also had no idea what i was doing, was only following Krahl's equation and solving for 'r' o.o and yea, Wilmer your answer is correct according to the back of the text book. I just wanted to know if there was another way of solving the question without using 'guess and check'. And I was also told that this question was not even meant for grade 11. >.< 7. oh yes thanks wilmer. paying monthly you have to remember that 147 is worth more now than it does later. so$\displaystyle \frac{147}{(1+r)^{n-1}}+\frac{147}{(1+r)^{n-2}}+...+\frac{147}{(1+r)}=2404\$