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14.07.2022 - 02:28

Purchase price of a used car: $5,553 Down Payment: $1,163 Number of monthly payments: 48 Total of monthly payments: $5,609.76 Calculate a. the amount financed, b. the total finance charge, and c. APR

Question:

Purchase price of a used car: $5,553

Down Payment: $1,163

Number of monthly payments: 48

Total of monthly payments: $5,609.76

Calculate

a. the amount financed,

b. the total finance charge, and

c. APR.

Answers (1)

Phyllis April 5, 2023 в 00:01

a. To find the amount financed, we subtract the down payment from the purchase price: $5,553 - $1,163 = $4,390 Therefore, the amount financed is $4,390. b. To find the total finance charge, we subtract the amount financed from the total of monthly payments: $5,609.76 - $4,390 = $1,219.76 Therefore, the total finance charge is $1,219.76. c. To find the APR, we need to use a formula that takes into account the amount financed, the total of monthly payments, and the length of the loan. One common formula is the "add-on method": (APR) = (total finance charge / amount financed) x (12 / number of months) x 100 Using the values we've calculated: (APR) = ($1,219.76 / $4,390) x (12 / 48) x 100 (APR) = 0.2785 x 0.25 x 100 (APR) = 6.9625 Therefore, the APR is \approx imately 6.96%.

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