Miguel purchased a hot tub costing $5,010 by taking out an installment loan. He made a down payment of $1,300 and financed the balance for 24 months. If the payments are $177.77 each month, use the APR formula to find the APR. Round to the nearest hundredth of a percent. %

Miguel purchased a hot tub costing $5,010 by taking out an installment loan. He made a down payment of $1,300 and financed the balance for 24 months. If the payments are $177.77 each month, use the APR formula to find the APR. Round to the nearest hundredth of a percent. %

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 25PROB

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Miguel purchased a hot tub costing $5,010 by taking out an installment loan.
He made a down payment of $1,300 and financed the balance for 24
months. If the payments are $177.77 each month, use the APR formula to
find the APR. Round to the nearest hundredth of a percent.
%

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