Question

Audrey is buying a new car for $32,998.00. She plans to make a down payment of $4,200.00. If she's to make monthly payments of $525 for the next five years, what APR has she paid?

Answer 1

Answer:

3.7%

Step-by-step explanation:

Given:

Cost = $32,998

Down payment = $4,200

Remaining amount = $32,998 - $4,200 = $28,798

Monthly payment = $525

Duration = 5 years

Present value = Monthly payment × $[\frac{(1-(1+\frac{r}{k})^{-kn})}{(\frac{r}{k})}]$

here, k = 12 when compounded monthly

r is the rate of interest

thus,

$28,798 = $525 × $[\frac{(1-(1+\frac{r}{12})^{-12\times5})}{(\frac{r}{12})}]$

or

54.85 =  $[\frac{(1-(1+\frac{r}{12})^{-12\times5})}{(\frac{r}{12})}]$

or

r = 3.7%

Answer 2

For the next five years Audrey paid 3.7% i belive