The formula you will use is total amount paid/amount borrowed raised to 1/number of periods = x. Then x-1 x100 = implicit interest rate.
The function calculates the value at . 59%, which is a monthly interest rate. To annualize this monthly rate, multiply it by 12, and you get an implicit annual interest rate of 7. 0203%. [8] X Research source
For example, a food products company needs to lease a large pasteurizing machine. They decide to lease rather than purchase it. If the total cost of the lease is $1,000 and the company makes 12 payments of $100 per month, then the lease agreement has an implicit interest rate of 20%.
For example, you purchase bonds with a promised dividend of $5. 00 per share to be paid in one year. Due to fluctuations in the marketplace, you receive $10. 00 per share on the one-year due date. The implicit interest rate earned is 50%.
