Joshua borrowed $2,300 for one year and paid $138 in interest. The bank charged him an $15 service charge. If Joshua paid the $2,300 in 12 equal monthly payments, what is the APR? (Round your answer to 1 decimal place

After visiting several automobile dealerships, Richard selects the car he wants. He likes its $18,500 price, but financing through the dealer is no bargain. He has $3,700 cash for a down payment, so he needs an $14,800 loan. In shopping at several banks for an installment loan, he learns that interest on most automobile loans is quoted at add-on rates. That is, during the life of the loan, interest is paid on the full amount borrowed even though a portion of the principal has been paid back. Richard borrows $14,800 for a period of four years at an add-on interest rate of 11 percent.

What is the total interest on Richard’s loan?
What is the monthly payment?
What is the annual percentage rate (APR)? (Round your answer to 2 decimal places.)
What is the total cost of the car?

To calculate the Annual Percentage Rate (APR), we need to consider the interest paid, the loan amount, and the term of the loan.

First, let's calculate the total amount Joshua paid for the loan. This can be done by adding the interest and the service charge to the loan amount:

Total Amount Paid = Loan Amount + Interest + Service Charge
Total Amount Paid = $2,300 + $138 + $15
Total Amount Paid = $2,453

Next, let's calculate the monthly payment amount. Since Joshua paid the loan in 12 equal monthly payments, we can divide the total amount paid by 12:

Monthly Payment = Total Amount Paid / Number of Payments
Monthly Payment = $2,453 / 12
Monthly Payment = $204.42 (rounded to the nearest cent)

Now, let's calculate the annual interest paid. Since the loan term is one year, the amount of interest paid in one year is the same as the total interest paid:

Annual Interest = Interest = $138

Finally, let's calculate the APR. The APR is the annual interest as a percentage of the loan amount:

APR = (Annual Interest / Loan Amount) x 100
APR = ($138 / $2,300) x 100
APR ≈ 0.06 x 100
APR ≈ 6%

Therefore, the APR for Joshua's loan is approximately 6%.

To find the APR (Annual Percentage Rate), we need to use the formula:

APR = (Total Cost / Principal Amount) * (1 / Time)

In this case, the total cost includes the interest and the service charge. The principal amount is the amount Joshua borrowed, which is $2,300. And the time is one year.

Total Cost = Interest + Service Charge = $138 + $15 = $153
Principal Amount = $2,300
Time = 1 year

Now we can plug these values into the formula:

APR = ($153 / $2,300) * (1 / 1)

Simplifying:

APR = 0.0665 * 1

APR = 0.0665

To round the answer to 1 decimal place, the APR is approximately 6.7%.

138/2,300 = 0.06 = 6%