The owner of an automobile repair center purchased new electronic diagnostic equipment for $15,000. He paid 10% down and then paid 60 monthly payments of $296.91. Determine the APR of
The loan to the nearest one-half of a percent.

Question

Quizplus · Accepted Answer

The APR can be calculated using the formula for the present value of an annuity, which in this case is the loan amount minus the down payment. The down payment is 10% of $15,000, which is $1,500. Therefore, the loan amount is $15,000 - $1,500 = $13,500. Given the monthly payment of $296.91 over 60 months, we can use a financial calculator or an appropriate financial function in a spreadsheet to solve for the interest rate, which when annualized and rounded to the nearest half percent, gives us an APR of approximately 11.5%.

The Owner of an Automobile Repair Center Purchased New Electronic