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Find the APR, rounded to the nearest tenth of a percent (one decimal place) for the loan. Purchase a living room set for $4,900 at 8% add-on interest for 4 years. Enter only the number without % sign.

Sagot :

The annual percent rate(APR) to purchase a living room set for $4,900 at 8% add-on interest for 4 years is 8. 6

How to calculate the annual interest rate

Using the formula

APR = ((Interest + Fees / Loan amount) / Number of days in loan term)) x 365 x 100

Note that Interest expense = Original amount / interest rate

Interest amount = $4, 900

Rate = 8% = 0. 08

Interest expense = $4, 900× 0. 08 = $392

Loan amount is also the principal amount ,  P = I / (RT)

where I is Interest Amount, R is Rate of Interest and T is Time Period.

Principal amount = $4, 900 ÷ 0. 08 × 4 = $4, 900 ÷ 0.32 = $ 15,313. 5

Substitute the values into the formula for APR

APR = [tex]\frac{392+ 4900}{15312.5} / 1460 * 365* 100[/tex]

APR = [tex]0.345 / 1460 *365*100[/tex]

APR = [tex]2. 36* 10^-4 *365* 100[/tex]

APR = [tex]8. 625[/tex]

To the nearest tenth is, 8. 6

Therefore, the annual percent rate(APR) is 8. 6

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