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Leigh bought herself a set of new bedroom furniture. The total cost, including tax and delivery, was...

22. Leigh bought herself a set of new bedroom furniture. The total cost, including tax and delivery, was $5,169.97. The furniture store required $500 down, and Leigh financed the rest for 36 months at $154 per month. What is the annual percentage rate on her loan?
12.25%
11.75%
11.5%
10.5%

Answer

To find the annual percentage rate (APR), we need to calculate the total amount paid over the loan period and compare it to the amount financed.

  1. Amount financed: $5,169.97 - $500 = $4,669.97
  2. Total payments over 36 months: 36 * $154 = $5,544
  3. Interest paid: $5,544 - $4,669.97 = $874.03
  4. Using the table, find the APR that matches the monthly payment of $154 for 36 payments. The closest match is 11.75% with a monthly payment of $1914, which is closest to the calculated interest.

Answer: 11.75%

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