You take out an installment loan to purchase a sailplane costing $34,100. You make a down payment of $8,600 and finance the balance by making monthly payments of $1,176.72 for 24 months. Use the APR formula to find the APR.

Question

Quizplus · Accepted Answer

The APR can be calculated using the formula for the annual percentage rate on an installment loan. The financed amount is $34,100 - $8,600 = $25,500. The total payment over 24 months is $1,176.72 * 24 = $28,241.28. The interest paid is $28,241.28 - $25,500 = $2,741.28. Using the APR formula, the APR is approximately 9.99%.

You Take Out an Installment Loan to Purchase a Sailplane