Posted by **apryl** on Tuesday, August 23, 2011 at 3:43pm.

A car dealer will sell you a used car for $7,742 with $742 down and payments of $309.93 per month for 24 months. What is the APR?

- math -
**Reiny**, Tuesday, August 23, 2011 at 4:24pm
So your present value of the loan = $7000

n = 24

i = ??

P = 309.93

7000 = 309.93(1 - (1+i)^-24)/i

solving this for i is very messy, and we have no algebraic formulas that will do that.

I set up an Excel program where I found

a montyly rate of .004915 to come withing a few pennies of $7000

so the APR = 12(.004915) = .05898 or 5.898%

check: 309.93(1 - 1.004915^-24)/.004915 = 7000.17

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