Question

Paula Purchaser borrowed $500 at 12 percent for one year. She paid a $25 processing fee. The interest paid will be $ . Thus, the total finance charge (the interest plus the processing fee) will be $ Therefore, the APR = total finance charge ÷ amount borrowed = %.

Answer 1

Interest = $500*0.12=$60
Processing fee = $25
Total finance charge = $(60+25)=$85.

APR=(total finance charge)/amount borrowed
=85/500
=17%