Solve the problem. Use the approximate APR formula to estimate the APR, and round rates to the nearest tenth of a percent.
-Doris White decided to get new appliances for her kitchen at a cost of $5900. She puts $700 down and will pay $137.75 per month for 48 months. Find the total installment cost, the finance charge, and the approximate annual percentage rate.

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Quizplus · Accepted Answer

The total installment cost is calculated by multiplying the monthly payment by the number of months and adding the down payment: $137.75 * 48 + $700 = $7312.00. The finance charge is the total installment cost minus the original cost: $7312.00 - $5900 = $1412.00. To estimate the APR, use the formula: APR ≈ 2 * finance charge * 12 / (loan amount * (number of payments + 1)), which gives an approximate APR of 13.3%.

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