Eddy purchased a club membership costing $2,530. He made a down payment of $530 and financed the balance with an installment loan for 48 months. If the payments are $59.27 each month, use Table 13-1 from your text to find the APR.

Question

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The financed amount is $2,000 ($2,530 - $530). Over 48 months, Eddy pays $59.27 monthly, totaling $2,844.96. The finance charge is $844.96 ($2,844.96 - $2,000). Using Table 13-1, this corresponds to an APR of approximately 18.50%.

Eddy Purchased a Club Membership Costing $2,530