posted by benny on .
Tim Worker buys a new sofa for $629.95. He pays 25% down and takes an installment loan to complete the purchase. He makes 12 payments which include his principal and a $60.00 finance charge. What is the APR on his loan to the nearest tenth?
The down payment is $
The amount financed is $
The monthly payment will be $
At the end of one year the monthly payments will total $
The finance charge for one year ÷ amount financed is
I = Po*r*t = $60.
472.46*r*1 = 60
r = 0.127 = 12.7% = APR
0.25 * 629.95 = $157.49 = Down payment.
629.95 - 157.49 = $472.46=Amt. financed.
(472.46+60)/12 = 532.46/12 = $44.37/mo.
472.46 + 60 = $532.46 = Total paid.