A car dealer will sell you a used car for $5709 with $709 down and payments of 233.75 per month for 24 months. What is the simple interest rate? Rounded to the nearest tenth.

Answer 1

Po = $5709 - $709 = $5000.
P = 233.75 * 24 = $5610.
I = 5610 - 5000 = $61o.

I = Po*r*t = 610.
5000*r*2yrs = 610
r = 610/10,000 = 0.061 = 6.1% = APR.