Question

A car dealer carries out the following calculations. List price $ 5,368.00 Options $ 1,625.00 Destination charges $ 200.00 Subtotal $ 7,193.00 Tax $ 431.58 Less trade-in $ 2,932.00 Amount to be financed $ 4,692.58 15% interest for 48 months $ 2,815.55 Total $ 7,508.13 MONTHLY PAYMENT $ 156.42 What is the annual percentage rate

Answer 1

Answer and Explanation:

Given interest rate =10%

Repayment months= 48 months,

Interest rate =10% for 48 monthsv

To calculate annual percentage rate,

The annual percentage rate = 2 * repayment months* interest rate divided by repayment months + 1

Annual percentage rate= 2*48*10%/48+1

=2*48*0.10/49

= 96*0.10/49

= 9.6/49= 0.1959= 19.59%

Therefore annual percentage rate = 19.59%