After graduating from college, Leigh purchased her first car. The total cost, including all taxes, fees and...

Question

17. After graduating from college, Leigh purchased her first car. The total cost, including all taxes, fees and licenses was $15,770. Leigh's down payment was $3,500, and her loan payment was $254.71 for 60 months. Calculate the approximate annual percentage rate (APR) for Leigh's loan, and round your answer to the nearest tenth of a percent.
- 9.7%
- 5.4%
- 8.9%
- 0.1%

SnapAndSolve AI · Accepted Answer

To calculate the approximate annual percentage rate (APR), we can use the formula for the monthly payment of an installment loan:

Loan Amount: $15,770 - $3,500 = $12,270

Monthly Payment: $254.71

Number of Payments: 60

Using the formula for monthly payments:

P = (r * PV) / (1 - (1 + r)^-n)

Where:

P = monthly payment ($254.71)
PV = present value or loan amount ($12,270)
r = monthly interest rate
n = number of payments (60)

We need to solve for r, which involves some trial and error or using a financial calculator. After solving, the approximate APR is:

8.9%

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After graduating from college, Leigh purchased her first car. The total cost, including all taxes, fees and...

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