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Question

# Umeki Akita repaid a loan of $3,200 in 15 monthly inst allments of$232.80 each. Use the annual percentage rate table in Chapter 4 to find the APR on his loan.

Solution

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First find total interest:

= $232.80$\times$15 - \3,200\\ = \292 total interest\\\\ Find number of \100s in the principal:\\ = \3,200$\div$\100\\ = 32\\\\ Then divide the total interest (computed in \#22) by 40:\\ = \292$\div$32\ =$9.125 finance charge per $100 of amount financed\ Use the Annual Percent age Rate Tables on page 162. Read across the rows for 15 payments until you come to the amount closest to$9.125. Since $9.06 is the closest amount, the rate is 13$\$$\dfrac{1}{4}$%.

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