Park 3.6 a loan of $15,000 is to be financed to assist a person's college education. based upon monthly compounding for 36 months, the end-of-the-month equal payment is quoted as $493.93. what nominal interest rate is being charged?

The nominal interest rate is 11.40%.

We follow these steps to arrive at the

We have the following information form the question

PV of a loan                  $15000

No. of periods                       36

Equal Payment (EMI)    $493.93

With this information, we can use the 'rate' function in excel to find the rate per period. The 'rate' function in excel uses the iteration process to compute the rate per period of an annuity.

The syntax in excel is =RATE(36,493.93,-15000).

This yields a rate of 0.95003%  per month.

Once we have the monthly interest rate, we can find the nominal interest rate by:

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