So I know the calculation for simple interest p=1x1+r
Compound Interest p=1x1+r^n
But what I am trying to do is something similar to working out the effective interest rate from the amount of actual interest paid on top of the loan amount.
The figures I am working with are capital loaned = £3875 & total paid back with interest is £5693 over three years
Therefore 5693 / 3875 = 1.47 = annual ratio^3. Hence the annual ratio = 1.46^1/3 = 1.13444, giving an effective annual rate of 13.44%
What my question is how do I then calculate what the APR is from these figures and rates above. I tried googling it but nothing explains how to calculate APR from the actual of interest one pays.
There will be some rounding errors from above just wanted to make it easier to explain.
