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Tim Worker buys a new sofa for $549.95. He pays 20% down and takes an installment loan to complete the purchase. He makes 12 payments which include his principal and a $50.00 fi…

Tim Worker buys a new sofa for $549.95. He pays 20% down and takes an installment loan to complete the purchase. He makes 12 payments which include his principal and a $50.00 fi…
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Tim Worker buys a new sofa for $549.95. He pays 20% down and takes an installment loan to complete the purchase. He makes 12 payments which include his principal and a $50.00 finance charge. What is the APR on his loan to the nearest tenth?

User Moodywoody
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1 Answer

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Down payment: $549.95 * .20 = $109.99
Amount financed $549.95 - $109.99 = $439.96
Monthly Payment: $439.96 + 50 / 12 = $40.83
Monthly Payment Totals = $489.96
Finance Charge / amount financed x 100 = 11.36% APR
User Mtfk
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