At wwwdaveramseycoms Financial Peace University FPU Dave rec

At www.daveramsey.com’s Financial Peace University (FPU), Dave recommends Seven Baby Steps. One of these steps is “Pay off debt using the debt snowball.” After graduating from FPU, Courtney Lopez-Munoz is trying to calculate the effective interest rate she is paying for a $1,825 simple discount note at % for 17 months. What rate has she been paying? (Do not round intermediate calculations. Round your final answer to the nearest tenth percent.) Effective interest rate %

Solution

Interest = $1825 x 6.25% x 17/12 months $161.59 Cost = $1825 - $161.59 $1,663.41 Effective Rate = = $161.59 /($1663.41 x 17/12 months) 6.86%