Mathematics

Question

John Brown has a $50,000 loan. He has a 9% annual interest rate. He paid $2,000 in fees and $4,486.05 in total interest the first year. If the APR is the finance charge (interest plus fees) for one year ÷ amount financed, what was the APR rounded to the nearest percent for that year?

2 Answer

  • (2,000+4,486.05)÷50,000)×100=13%
  • Answer:

    ≈ 13%

    Step-by-step explanation:

    Given :

    John Brown has a $50,000 loan.

    He has a annual interest rate= 9%

    He paid $2,000 in fees and $4,486.05 in total interest the first year.

    Solution :

    We are given that

    APR = finance charge (interest plus fees) for one year/ amount financed--(A)

    Finance charge (interest plus fees) for one year= ($4,486.05+  $2,000) = $6486.05

    Amount financed = $50,000

    putting these values in (A)

    APR = $6486.05/$50,000

    APR = 0.129

    APR = 0.129*100 =12.9% ≈ 13%

    THUS , APR is approx. 13%

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