Question

Audrey is buying a new car for $32,998.00. She plans to make a down payment of $4,200.00. If she's to make monthly payments of $525 for the next five years, what APR has she paid?

Answer 1

For the next five years Audrey paid 3.7% i belive

Answer 2

3.7%

Explanation:

Given:

Cost = $32,998

Down payment = $4,200

Remaining amount = $32,998 - $4,200 = $28,798

Monthly payment = $525

Duration = 5 years

Present value = Monthly payment ×
`[((1-(1+(r)/(k))^(-kn)))/(((r)/(k)))]`

here, k = 12 when compounded monthly

r is the rate of interest

thus,

$28,798 = $525 ×
`[((1-(1+(r)/(12))^(-12*5)))/(((r)/(12)))]`

or

54.85 =
`[((1-(1+(r)/(12))^(-12*5)))/(((r)/(12)))]`

or

r = 3.7%