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MAVERICK
1 day ago
12

Jack Fitzgerald wishes to purchase a used car that has a cash price of ​$11 comma 000. The installment terms include a down paym

ent of ​$4 comma 000 and 36 monthly payments of ​$225. ​a) What finance charge will Jack​ pay? ​b) What is the APR to the nearest half​ percent?
Business
1 answer:
Free_Kalibri [3.4K]1 day ago
7 0
a) The finance charge totals $1,100. b) The APR stands at 9.75%. The amount needing to be financed comes to 11,000 - 4,000 = $7,000, while the total repayment equals 225 x 36 = $8,100. Thus, the finance charge is derived from the total repayment minus the financed amount, yielding $1,100. For part b), we apply the present value formula for annuities to determine the monthly interest rate i: Amount needing financing = (monthly installment x i) / [1 - (1+i)^-36], equating to 7,000 = (225/i) x [1 - (1+i)^-36], giving us i = 0.811%, which translates to APR = 12 x i = 9.732%.
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