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What is the actual annual interest rate

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Question - You are in the market for a new, high performance wind surfing board. A dealer offers you financing on the $1,500 you need to buy the board at a "low 10 % annual interest rate "for 24 months. Your payments are determined as follows:

Annual interest = 10% of $1,500 = $150 per year Total due = principal + two years interest

= $1,500 + 2($150)

= $1,800

Monthly Payment = $1,800 / 24 months = $75 per month

This procedure is called "add on" interest. What is the actual annual interest rate being charged on this loan?

Reference no: EM132831880

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