An insurance policy from GEICO has an up-front charge of $722.10 for 6 months' coverage, or one can choose from several payment plans including a monthly plan described below.
If one chooses the monthly plan, he/she is borrowing from GEICO. Use the IRR function to determine what annual rate of interest (APR) GEICO is charging.
Hint: Let time zero be one month before coverage starts.
An insurance policy from GEICO has an up-front charge of $722.10 for 6 months' coverage, or one can choose from several payment plans including a monthly plan described below.
If one chooses the monthly plan, he/she is borrowing from GEICO. Use the IRR function to determine what annual rate of interest (APR) GEICO is charging.
Hint: Let time zero be one month before coverage starts.
$722.10 OR the monthly payment plan including:
1 month before the start of coverage $125.00 at the start of coverage $124.00
1 month after the start of coverage $124.00
2 months after the start of coverage $124.00
3 months after the start of coverage $125.00
4 months after the start of coverage $124.10