Question

. Ed Naiman.

Installment loan of $2,500.00.
Finance charge of $193.25.
Requires 24 monthly payments.
What is the APR?
I

Answer 1

M = (2500 + 193.25) / 24 = $113.03

We can use the monthly payment to calculate the finance charge over the life of the loan, which is equal to 24 times the monthly payment minus the principal amount:

Finance charge = 24 * M - 2500 = 24 * 113.03 - 2500 = 193.25

Now that we have the finance charge, we can calculate the APR:

APR = (Finance charge / Principal amount) * (12 / Number of months) * 100%

APR = (193.25 / 2500) * (12 / 24) * 100%

APR = 7.73%

So, the APR of this loan is 7.73%.