Question

Suppose you take out a 60-month instalment loan to finance one year of tuition for $13,100. The paymeats are 5327.50 per moeth and the total finance: charge is 56,550 . Using Table 13-1, calculate APR? Select one:

a. 1896
b. 17.25%
c. 1080 d. 6%

Answer 1

To calculate the APR, use the formula: APR = (total finance charge / loan amount) * (12 / number of months). In this case, the APR is 1740.8%.

Step-by-step explanation:

To calculate the APR, you can use the formula:

APR = (Total finance charge / Loan amount) * (12 / Number of months)

In this case, the total finance charge is $56,550, and the loan amount is $13,100. The number of months is 60. Plugging those values into the formula:

`APR = (56550 / 13100) * (12 / 60) = 1740.8%`

Therefore, the APR is 1740.8%.