Alfred Juarez paid off a 15,000 car lon over3 years with monthly payments of $ 487.54 each. Find the finance charge and the APR

2 answers

487.54 * 36 = 17,551.44

17,551.44 - 15,000 = 2,551.44 interest

2,551.44 / 3 = 850.48

850.48 / 15,000 = 0.0566986 = 5.67% APR
Ms Sue, this has to be done with compound interest

15000 = 487.54( (1+i)^-36)/i

tough to solve ...
I ran it through the Wolfram equation solver and got
i = .00875 per month
so the annual rate is 12(.00875) = .105 = 10.5%

check:
if rate is 10.5%
then i = .105/12 = .00875

PV = 487.54 (1 - 1.00875^-36)/.00875
= 15000.10 , not bad