Question

Calculate the APR of a loan for $9,775 (which includes loan fees of $210), at 13% for 4 years. Round your answer to the nearest hundredth percent.

Answer 1

Answer: 13.54%

Explanation:

We compute the annual percentage rate (APR) using the formula:

APR=[(loanfee+interest)/Principaln×365]×100

Where n is the number of days in the loan repayment term.

In our question, we have:

r = 0.13n=4×365=1,460 days.

Therefore:APR=[(210+9,775×0.13)/9,7751,460×365]×100=13.54%