Question

John Brown has a $50,000 loan. He has a 9% annual interest rate. He paid $2,000 in fees and $4,486.05 in total interest the first year. If the APR is the finance charge (interest plus fees) for one year ÷ amount financed, what was the APR rounded to the nearest percent for that year?

Answer 1

(2,000+4,486.05)÷50,000)×100=13%

Answer 2

Answer:

≈ 13%

Step-by-step explanation:

Given :

John Brown has a $50,000 loan.

He has a annual interest rate= 9%

He paid $2,000 in fees and $4,486.05 in total interest the first year.

Solution :

We are given that

APR = finance charge (interest plus fees) for one year/ amount financed--(A)

Finance charge (interest plus fees) for one year= ($4,486.05+  $2,000) = $6486.05

Amount financed = $50,000

putting these values in (A)

APR = $6486.05/$50,000

APR = 0.129

APR = 0.129*100 =12.9% ≈ 13%

THUS , APR is approx. 13%