Sammy is looking to borrow money and agrees to borrow $1,000 from Tommy. Sammy says that he can pay Tommy back $93/month for the next 12 months. How much interest will be paid on this loan? Answer: Buttons to enter into your HP 10bii N (number of months) = 12 I/YR (interest rate/year) = ?? (this is what we are solving) PV (present value) = $1,000 (this is the amount of money borrower/lent. We will look at it from Sammy's perspective, so we will say it is positive since he he receiving the $1,000 in his pocket) PMT (monthly payments) = -$93 (this is the amount that Sammy pays Tommy every month. It is negative from Sammy's perspective as the money is leaving his pocket) FV (future value) = 0 (once the 12 monthly payments are made, the debt is paid off in full) After entering in the information above, the answer is 20.76%. This means that if Tommy lends $1,000 to Sammy, and Sammy pays him back $93/month for the next 12 months, the interest on that loan would be 20.76%.
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