Question

John bought a used truck for $4,500. He made an agreement with the dealer to put $1,500 down and make payments of $350 for the next 10 months. The extra cost paid by taking this deal is equivalent to what actual yearly rate of interest?

A. 63%
B. 36%
C. 33%
D. 3.6%

Answer 1

Answer:The price of the truck is 4500 dollars.

But he paid it into breakdown:

=> 1500 dollars first payment

=> 350 dollars = 10 months => 350 * 10 = 3500 dollars

=> Total = 3500 + 1500 = 5000 dollars

=> 5000 - 4500 = 500 dollars additional for 10 months

=> 500 / 10 = 50 dollars per month

=> 50 * 12 = 600 dollars for 1 year

=> 600 / 4500 = 13.33% of the yearly interest.

Explanation:

Answer 2

The price of the truck is 4500 dollars.
But he paid it into breakdown:
=> 1500 dollars first payment
=> 350 dollars = 10 months => 350 * 10 = 3500 dollars
=> Total = 3500 + 1500 = 5000 dollars
=> 5000 - 4500 = 500 dollars additional for 10 months
=> 500 / 10 = 50 dollars per month
=> 50 * 12 = 600 dollars for 1 year
=> 600 / 4500 = 13.33% of the yearly interest.