Question

Jennifer Siegel bought a new Ford Focus for $25,000. She made a down payment of $5,000, and she financed the balance at $300 a month for 4 years. Find the APR using a spreadsheet. Round your answer to two decimal places.

a. 4.53%
b. 6.78%
c. 5.92%
d. 3.21%

Answer 1

To find the APR using a spreadsheet, you can use the RATE function. The calculated APR is approximately 6.78% (b).

Step-by-step explanation:

To find the APR using a spreadsheet, you can use the RATE function. The RATE function calculates the annual interest rate for a loan with a fixed payment and constant interest rate. In this case, the loan amount is $20,000 (balance after down payment), the payment amount is $300, and the number of periods is 48 (4 years x 12 months).

To calculate the APR, you can use the formula: =RATE(48, 300, -20000).

The calculated APR is approximately 6.78%. So the correct answer is b) 6.78%.