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30 October, 00:38

oshua borrowed $2,300 for one year and paid $138 in interest. The bank charged him a service charge of $15. If Joshua repaid the loan in 12 equal monthly payments, what is the APR

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  1. 30 October, 00:47
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    0.067 or 6.7%

    Explanation:

    Given;

    Principal = $2300

    interest = $138

    Service charge = $15

    Therefore to find APR, we use the formula:

    APR=Finance charge/Principal

    To find finance charge we use

    Finance charge (FC) = interest + service charge (SC)

    = $138 + $15

    = $153

    Therefore

    APR = Finance charge / Principal

    = $153 / $2300

    = 0.067 or 6.7%
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