Answer: The APR is 2.48%
Step-by-step explanation:
The annual percentage rate is the total amount to be paid yearly to support the purchase of a car. It is given by the formula;
(Fees + Interest/Principal/n *365) * 100
In the given question,
Interest=12.4% or $3416.2
Principal=$27500
Number of days=365*5
=1825
Interest was gotten by multiplying the monthly payment which is $515.27 by 12. The result was then multiplied by 5 to give $30916.2. This is then subtracted from the principal amount.
Therefore we have;
($3416.2 / $27500 / 1825* 365)*100
=2.48%
Note that fees are not usually charged in car loans.