Use an annual percentage rate table to solve the problem.
-A college student purchased a used car for $4000. He paid 8% down and then paid 18 monthly Payments of $216.79. Determine the APR of the loan to the nearest one-half of a percent.
A) 8.5%
B) 7.0%
C) 7.5%
D) 6.0%

Question

Quizplus · Accepted Answer

The student's down payment is 8% of $4000, which is $320. This means the loan amount is $4000 - $320 = $3680. The total amount paid through monthly payments is 18 * $216.79 = $3902.22. The interest paid is $3902.22 - $3680 = $222.22. To find the APR, we need to consider the loan amount, the total interest paid, and the loan period. Given the complexity of calculating APR, which involves understanding the exact formula or using a financial calculator or an APR table, and since the problem suggests using an APR table, we match the given loan details (initial loan amount, monthly payment, and loan term) to the closest APR in the table. Without the actual table, we rely on the problem's instruction and the provided choices. The correct choice, based on the information given and typical APR calculations, would be closest to 7.5%, as it would be a reasonable APR for a used car loan over an 18-month period, considering the total interest paid over the loan term.

Use an Annual Percentage Rate Table to Solve the Problem