A customer wishes to buy a new car at a year-end sale. The dealer states the price is $10,000 with license and taxes included. If you put $1,000 down and agree to make payments of $200 per month for 5 years, what is the APR using the formula above?

Question

Kamila Jenkins

Mathematics

16 October, 08:27

A customer wishes to buy a new car at a year-end sale. The dealer states the price is $10,000 with license and taxes included. If you put $1,000 down and agree to make payments of $200 per month for 5 years, what is the APR using the formula above?

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Answers (1)

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Aubrie Swanson · Answer 1

The price after down payment

10,000-1,000=9,000

number of months in 5 years

5*12=60 months

Total paid

200*60=12,000

Total interest

12,000-9,000=3,000

APR formula is

I = (2yc) : m (n+1)

I = (2*12*3,000) : (9,000 * (6+1))

I=0.1311*100

I=13.11% ... answer