Give me an example of Sometimes loan vendors include fees that are outside of the interest rate being charged. Those

fees raise your costs of taking the loan. To compare loans, you can find the equivalent interest

rate including the fees.

Your bank has started a promotion where they let you convert a charge on your credit card to a

payment plan. Instead of charging you interest on the payment plan, they charge a flat fee. The

flat fee is based on length of the payment plan.

Payment plan length Fee

$6$ months $3\%$ of total

$1$ year $5\%$ of total

$18$ months $7\%$ of total

Here$$s an example for a $$1500$ laptop with a $1-$year payment plan length:

Description Amount

Original charge on credit card $$1500\mathrm{.}00$

Payment plan fee @ $6\%$ $$90\mathrm{.}00$

Total owing $$1590\mathrm{.}00$

Monthly payment $$132\mathrm{.}50$

These payments plans are advertised as $0\%$ interest, but there is a cost to them just like interest

payments. What would the interest rate be on a loan with equivalent monthly payments for

these $3$ payment plans?

Enter your formulas on Sheet$3.$

Use the following process:

$1.$ Enter the purchase amount

$2.$ Calculate the payment plan fee.

$3.$ Calculate the monthly payment.

$4.$ Calculate the equivalent interest rate by using the RATE function.