The local Rent-to-Own Store offers you the following plan to purchase a washing machine. The washing machine retails for $675, but you will have three years to pay it off using a simple interest Loan. If you pay back $950, then what was the APR on this loan? Give your answer as a percentage
Rounded to the nearest tenth of a percent.

Question

Quizplus · Accepted Answer

The simple interest formula is I = PRT. Here, I = $950 - $675 = $275, P = $675, and T = 3 years. Solving for R gives R = I / (PT) = $275 / ($675 * 3) = 0.1358, which is approximately 13.6% when converted to a percentage.

The Local Rent-To-Own Store Offers You the Following Plan to Purchase