Question

Tim Worker buys a satellite dish for $329.99. He pays 10% down and takes an installment loan to complete the purchase. He makes 12 payments which include his principal and a $40.00 finance charge. What is the APR on his loan?

Tim will pay ($329.99 x 10%) or $ (to the nearest whole number) for his down payment.

He will finance ($329.99 - down payment) or $.

Tim will repay finance amount ÷ 12 plus $40.00 ÷ 12 or monthly payment of $.

At the end of one year Tim will have paid monthly payments totaling $.

The APR = finance charge for one year ÷ amount financed = % (to the nearest tenth).

Answer 1

Amount financed:

329.99−329.99×0.1 =296.99 (rounding to the 100th would leave of the 1)

Monthly payment:

(296.991÷12)+(40÷12) =28.08

Total monthly payments:

28.08×12 = 336.96

At the end of 1 year:

$4,043.52

APR:

((336.96−296.99)÷296.99)×100 = 13.5%

Answer 2

Amount financed
329.99−329.99×0.1
=296.991
Monthly payment
(296.991÷12)+(40÷12)
=28.08
Total monthly payments
28.08×12
=336.96
APR
((336.96−296.99)÷296.99)×100
=13.5%