Jenny bought a new car for $30,000. The loan contract asked her to pay $880 per...

Jenny bought a new car for $30,000. The loan contract asked her to pay $880 per month for 36 months. What is the APR of the auto loan?

		0.30%
		3.57%
		2.93%
		3.37%

Solutions

Expert Solution

Present Value Of An Annuity
= C*[1-(1+i)^-n]/i]

Where,
C= Cash Flow per period
i = interest rate per period
n=number of period

30000= $880[ 1-(1+i)^-36 /i]

30000/880 =[ 1-(1+i)^-36 /i]
34.09091 =[ 1-(1+i)^-36 /i]
I =0.297547%

Monthly interest rate = 0.297547%

APR =0.297547%*12
=3.57%

jeff jeffy answered 2 years ago

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