1. You get a $15,000 car loan for 4 years at 6.75% interest. The lender charges...

1. You get a $15,000 car loan for 4 years at 6.75% interest. The lender charges $250 for an origination fee (which is added to your loan amount). What is your APR?

2. You buy furniture for $2,500. You pay $300 down and the retailer finances the remainder with 36 monthly payments of $80. Calculate your APR.

Solutions

Expert Solution

1. Total Loan Amount = Original Loan Amount + Lender Charges = $15,000 + $250 = $15,250

New Annual Interest Charges = $15,250 * 6.75 % =$1,029.375

APR = New Annual Int. Charges/ Original Loan Amount = 1029.375/15,000 * 100 = 6.8625%

2.Using finacial calculator,

pv= -2200, PMT =80, t= 36, i =APR = 1.535%

jeff jeffy answered 1 year ago

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