Question

after visiting several automobile dealerships richard selects richard selects the used car he wants he likes it 10,000 price but finanicing through the dealer is no bargain. he has 2000 cash for a down payment so he needs an 8000 loan in shopping at several banks for an installment loan he learns that interest on most autmobile loan is wuoated at add on rates

Answer 1

21.55%

Step-by-step explanation:

- I = Prt

- I = (8000)(.11)(4) = 3520

- Total Cost = Down Payment + Principal Borrowed + Interest

- Total Cost = 2000 + 8000 + 3520 = 13520

- Monthly Payment = (Principal Borrowed + Total interest) / Total number of payments

- Monthly Payment = (8000 + 3520) / 48

- APR= (2 × n × I) / [P × (N + 1)]

- APR = (2 × 12 × 3520) / [8000 × (48+1)] = 21.55%