Question

Lenny Lendee purchased a snowblower for $199.95. He paid 25% down and agreed to pay $14.99 for 12 months.

His 25% down payment was $.

So he will finance $.

At the end of one year, his monthly payments will total $.

To the nearest tenth, his APR = total finance charge ÷ amount borrowed = %.

Answer 1

199.95×0.25=49.99
199.95−49.99=149.96
14.99×12=179.88
(179.88−149.96)÷149.96)*100=19.95%

Answer 2

Downpayment = $ 49.9875

Financed amount = $ 149.9625

Total monthly payment = $ 179.88

APR = 19.9 %

Explanation:

Given,

The original value, P = $ 199.95,

Down payment percentage = 25%,

Thus, the down payment amount = 25% of P

= 25% of 199.95

= 0.25 × 199.95

= $ 49.9875,

Also, the amount financed or borrowed amount = Original value - down payment

= 199.95 - 49.9875

= $ 149.9625

At the end of one year the total monthly payment = 12 × monthly payment

= 12 × 14.99

= $ 179.88

So, total finance charge = Total monthly payment - finance amount

= 179.88 - 149.9625

= $ 29.9175

Hence, APR =
`\frac{\text{Total finance charge}}{\text{amount borrowed}}`

`=(29.9175)/(149.9625)`

`=0.199499874969`

= 19.9499874969 %

≈ 19.9 %