John bought a used truck for $4,500. He made an agreement with the dealer to put $1,500 down and make payments of $350 for the n
ext 10 months. The extra cost paid by taking this deal is equivalent to what actual yearly rate of interest?
A. 3.6%
B. 63%
C. 33%
D. 36%
Please provide an explanation, thanks! :)
1 answer:
Answer:
(D) 36%
Step-by-step explanation:
Actual cost of truck = $4500
Down payment = $1500
Money left to be paid = 4500-1500 = $3000
A = Monthly payments = 350
n = 10
Principal value (P) = 3000
Using formula,
A=
350 =
= 36% (approx)
Hence (D) is correct.
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