Richard purchased a car for $39,905. He made a downpayment of $15,000 and paid $614 monthly for 45 years. Find the APR.
Richard was able to payoff the loan at the end of 30 months. Using the Actuarial method find he unearned interest, and payoff amount.
My answer 39905-15000=24905
614*48=29472
29472-24905=4567
4567/24905*100=18.34
The APR will be 9%
3 answers
You must have a typo. Richard spent 45 years paying for a car?
Correction not 45 yrs but 4yrs
not that simple
let the monthly rate be i
614 (1 - (1+i)^-48)/i = 24905
very tough to solve
I will let Wolfram do it
https://www.wolframalpha.com/input/?i=sove+614+(1+-+(1%2Bx)%5E-48)%2Fx+%3D+24905
i= .00709283
12i = .08511... or 8.511% per annum compounded monthly
let the monthly rate be i
614 (1 - (1+i)^-48)/i = 24905
very tough to solve
I will let Wolfram do it
https://www.wolframalpha.com/input/?i=sove+614+(1+-+(1%2Bx)%5E-48)%2Fx+%3D+24905
i= .00709283
12i = .08511... or 8.511% per annum compounded monthly
1 answer