Question

David is buying a new car for $21,349.00. He plans to make a down payment of $3,000.00. If he's to make monthly payments of $352 for the next five years, what APR has he paid? A. 59% B. 5.9% C. .05% D. 5%

Answer 1

APR has he paid 5.9%

option B is correct

Step-by-step explanation:

given data

Cost of car = $21,349

down payment = $3000

Monthly payments (A) = $352

time period t = 5 year = 5 × 12 = 60 months

to find out

what APR has he paid

solution

we know that we have remaining balance amount = 21349 - 3000

= $18,349

so we say that loan amount L = $18,349

here rate r = rate of interest = r/12 monthly

so we use formula amount

payment (A) =
`(L(r)/(12) )/(1-(1+(r)/(12))^(-t) )`

put all thes evalue we get

352 =
`(18349(r)/(12) )/(1-(1+(r)/(12))^(-60) )`

r = 0.059 = 5.9 %

so option B is correct

APR has he paid 5.9%