Question

Choose the correct answer. Sonja Koch has a $90,000 loan with a 9% annual interest rate. She paid $350 for a title background check, $400 for the title insurance, $250 for deeds and attorneys, and $8,690.40 in total interest for the first year. If the APR is the finance charge (interest plus fees) for one year ÷ amount financed, what was the APR for that year?

Answer 1

Given:
loan amount : 90,000
annual interest rate: 9%
title background check: 350
title insurance: 400
deeds and atty fees: 250
total interest for the 1st year: 8,690.40

APR = finance charge for one year / amount financed

finance charge = interest plus fees
finance charge = 8,690.40 + 350 + 400 + 250 = 9,690.40

APR = 9,690.40 / 90,000
APR = 0.10767

0.10767 x 100% = 10.76 or 10.77% APR for the year.

Answer 2

ANSWER—— 10.8%

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