You borrow 125000 the annual loan payments are 908111 for 30

You borrow $125,000; the annual loan payments are $9,081.11 for 30 years. What interest rate are you being charged? Round your answer to two decimal places.

___%

Solution

Let interest rate be x%

At this interet rate;present value of annual loan payments=$125000

125000=9081.11/1.0x+9081.11/1.0x^2+..................+9081.11/1.0x^30

Hence x=interest rate=6%(Approx).