Answer
$15.84\%$
Work Step by Step
Step 1. Identify the given quantities: current value $A_p=2000-200=1800$ (loan value is the total minus the down payment), each payment $R=88$, total number years $2$, monthly compounding, total number of payments $n=2\times12=24$.
Step 2. Assume the interest rate is $r$, we have the per period rate as $i=r/12$, and we have the equation:
$A_p=R\frac{1-(1+i)^{-n}}{i}$ or $1800=88\times\frac{1-(1+r/12)^{-24}}{r/12}$ which gives:
$\frac{1800}{88\times12}r-1+(1+r/12)^{-24}=0$
Step 3. To solve for $r$, graph the function as shown in the figure and we can find a zero at $(0.1584,0)$ which gives the interest rate as $r=15.84\%$
