Matthew borrowed $27,000 for his car. He is making payments of $525 per month for five years. If interest is compounded quarterly, what rate of interest is Matthew paying?

Compounded Quarterly

The process of calculating interest on both the initial principal and the accumulated interest over three-month intervals.

Interest Rate

The percentage at which interest is calculated on the principal of a loan or deposit over a specific period of time.

Payments

The act of transferring money or something of value from one party to another in exchange for goods, services, or to fulfill a legal obligation.

Calculate effective and nominal interest rates for ordinary annuities.
Analyze the actual interest rate applicable to consumer finance choices, considering the impact of promotional discounts and compound interest.

Verified Answer

Final Answer :

6.3% compounded quarterly

Learning Objectives

Calculate effective and nominal interest rates for ordinary annuities.
Analyze the actual interest rate applicable to consumer finance choices, considering the impact of promotional discounts and compound interest.