Question

You want to purchase a new motorcycle that costs $29,200. The most you can pay each month is $615 over the life of the 60-month loan. What is the highest APR that you could afford

Answer 1

5.27%

Step-by-step explanation:

APR = {[(interest / principal)/n] x 365 days} x 100

• total payments = 60 x $615 = $36,900
• interests paid = $36,900 - $29,200 = $7,700
• principal = $29,200
• n = 5 years x 365 days = 1,825 days

APR = {[($7,700 / $29,200) / 1,825 days] x 365 days} x 100

APR = {(0.26369863 / 1,825 days) x 365 days} x 100 = 5.27%