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February 19th, 2015, 08:45 AM  #1 
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 14,597 Thanks: 1039  SIMPLE interest
Found this problem: 3 payments of 4000 due in 4, 8 and 12 months are to be settled by 5 equal payments due today, 3 months from now, 6 months from now, 9 months from now and 12 months from now. What is the size of the equal payments if SIMPLE interest is used, and the interest rate is 12.75% ? My solution is 2352.06 Anybody agree/disagree? Thanks. 
February 22nd, 2015, 01:41 PM  #2 
Senior Member Joined: Jul 2014 From: भारत Posts: 1,178 Thanks: 230 
I agree. The question seemed confusing initially, but was clear after a while. You forgot to mention the unit of the interest rate (p.a.).

February 22nd, 2015, 03:57 PM  #3 
Math Team Joined: Oct 2011 From: Ottawa Ontario, Canada Posts: 14,597 Thanks: 1039 
I also initially thought the interest unit should have been mentioned. But then I assumed that with SIMPLE interest, it was effective annual unless otherwise specified. 

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