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?
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