Here is the question:

A loan of $12,000 is to be repaid within one yr. with level monthly payments, due at the beginning of of each month.

The 12 payments equal $1000 each.

A finance charge of $632 is also due with the first payment.

Calculate the effective annual interest rate of the loan?

here's what I come up with:

12000 = (1000 + 632) + 1000 (a'') 11 | i

the equation they have is: (correct one)

12000 = (1000+632) + 1000 a 11 | i

they are saying in the problem that the payment is due at the beginning of each month, therefore it suppose to be annunity-Due, but somehow they are using annuity immediate.

Any idea why, please explain.

Thanks!

A loan of $12,000 is to be repaid within one yr. with level monthly payments, due at the beginning of of each month.

The 12 payments equal $1000 each.

A finance charge of $632 is also due with the first payment.

Calculate the effective annual interest rate of the loan?

here's what I come up with:

12000 = (1000 + 632) + 1000 (a'') 11 | i

the equation they have is: (correct one)

12000 = (1000+632) + 1000 a 11 | i

they are saying in the problem that the payment is due at the beginning of each month, therefore it suppose to be annunity-Due, but somehow they are using annuity immediate.

Any idea why, please explain.

Thanks!

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