To purchase a used automobile, you borrow $10,000 from Loan Shark Enterprises. They tell you the interest rate is 1% per month for 35 months. They also charge you $200 for a credit investigation, so you leave with $9,800 in your pocket. The monthly payment they calculated for you is[$10,000 (0.1) (35) + $10,000]/35 = $385.71/month. If you agree to these terms and sign their contract, what is the actual APR (annual percentage rate) that you are paying?
To purchase a used automobile, you borrow $10,000 from Loan Shark Enterprises. They tell you the interest rate is 1% per month for 35 months. They also charge you $200 for a credit investigation, so you leave with $9,800 in your pocket. The monthly payment they calculated for you is[$10,000 (0.1) (35) + $10,000]/35 = $385.71/month. If you agree to these terms and sign their contract, what is the actual APR (annual percentage rate) that you are paying?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
Problem 2P: Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for...
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To purchase a used automobile, you borrow $10,000 from Loan Shark Enterprises. They tell you the interest rate is 1% per month for 35 months. They also charge you $200 for a credit investigation, so you leave with $9,800 in your pocket. The monthly payment they calculated for you is
[$10,000 (0.1) (35) + $10,000]/35 = $385.71/month. If you agree to these terms and sign their contract, what is the actual APR (annual percentage rate) that you are paying?
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