You want to borrow $38,400 and can afford monthly payments of $960 for 48 months, but no more. assume monthly compounding. what

Question

3 years ago

12

is the highest apr rate you can afford?

1 answer:

Andru [333] · Answer 1 · 2022-01-13T16:51:12+03:00

To calculate the APR, we first calculate the monthly rate and then the APR (Annual percentage rate)

Monthly rate is calculated by using RATE function in excel as in =RATE(NPER,PMT,PV) where

NPER = number of period in months = 48

PMT = Monthly payment = 960

PV = Loan value = 38400

Monthly rate = RATE(48,960,-38400) = 0.77015%

APR = Monthly rate * 12

APR = 0.77015%*12

APR = 9.24% (Rounded to 2 decimals)