00:01
So we have a loan amount of 26 ,000.
00:04
We have an annual percentage rate of 0 .0422, which is compounded quarterly.
00:21
And we have a term for the loan of four years, with payments at the end of every month.
00:30
So we want to set n is equal to 12, because that's how many months we pay.
00:39
Now we have to convert the apr to a quarterly rate.
00:44
So if this is the quarterly rate, then 1 plus our apr divided by 4 to the fourth is going to give us what we accumulate in interest in one year.
01:02
So i here is the annual effective rate.
01:06
And then that will be equal to 1 plus m over 12, or let's call that r instead of m, to the 12th, where r is the interest rate compounded monthly.
01:37
So in order to find r, we said 1 .0422 divided...
01:54
Oh no, that's not true.
01:56
We have to divide it by 4.
01:59
1 plus 0 .0422 divided by 4 to the fourth equal to 1 plus r over 12 to the 12th.
02:12
And that gives us 1 .01055 to the 4 over 12 is equal to 1 plus r over 12.
02:26
And that means that r is equal to 1 plus...
02:40
Nope...
02:43
1 .01055 to the one -third minus 1 times 12...