1. David is buying a new car for $21,349.00. He plans to make a down payment of $3,000.00. If he's to make monthly payments of $352 for the next five years, what APR has he paid?
A. 5%
B. 5.9%
C. .05%
D. 59%
David is buying a new car for $21,349.00. He plans to make a down payment of $3,000.00. [ If he's to make monthly payments of $352 for the next five years, the APR he has to pay is 5.9%.
Solution:
Amount financed:
21349-3000=18349
Total paid:
5years=60months (12×5)
352×60
=21,120
Total interest:
21,120 18,349
=2,771
APR is:
(2,771×2×12)÷(18,349×61)
=0.059×100=5.9% ]
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