Question

Jim Tree borrowed $1,000 at 10 percent for one year. He paid a $45 processing fee and $100 in interest. He calculated the APR to the nearest tenth.

Answer 1

The finance charge is $145. $100 interest + $45 processing fee. So the APR $145/$1000= 0.145. remember to move the decimal 2 places to the right. so the answer it 14.5% APR.

Answer 2

The APR is 14.5%

Explanation:

APR is Annual Percentage Rate which is levied on the amount borrowed.

Jim Tree borrowed $1,000 at 10 percent for one year.

He paid a $45 processing fee and $100 in interest.

So, the total finance charge is =
`400+45=145`

Therefore, the APR is =
`(145)/(1000)` = 0.145

And in percentage it is
`0.145*100=14.5`%

Hence, the answer is 14.5%