Question

Whitney bought a watch for $107.50. The finance charge was $11 and she paid for it over 6 months.

Answer 1

Answer:

Her proximate APR is 5.1%

Step-by-step explanation:

The formula of the APR is $APR=\frac{FC}{A}$ × $\frac{m}{12}$ × 100%, where

• FC is the finance charge
• A is the amount financed
• m is the number of months

∵ Whitney bought a watch for $107.5

∴ A = 107.5

∵ The finance charge was $11

∴ FC = 11

∵ She paid for it over 6 months

∴ m = 6

- Substitute these values in the formula above

∵  $APR=\frac{11}{107.5}$ × $\frac{6}{12}$ × 100%

∴ APR = 5.11627907%

- Round it to the nearest tenth

∴ APR = 5.1%

Her proximate APR is 5.1%