You take out an installment loan to purchase a time-share costing \( \$ 18,000 \). You make a down payment of \( \$ 2,700 \) and finance the balance by making monthly payments of \( \$ 762 \) for 24 months. Use Table \( 13-1 \) to find the APR. Select one: a. \( 17.50 \% \) b. \( 17.75 \% \) c. \( 18.00 \% \) d. \( 18.25 \% \)
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The remaining loan amount after your down payment is \( \$ 15,300 \) (\$18,000 - \$2,700). Over 24 months, you are making payments of \$762, totaling \$18,288 (24 payments x \$762). To find the APR, we compare this to the amount financed and look for the interest rate that fits. After calculating, it appears that the APR is around \( 18.00\% \). To double-check, you can use financial calculators or online APR calculators available, which can simplify the process. In this case, inputting the loan amount, payment, and number of payments will yield your APR efficiently, ensuring you don’t have to manually go through complex tables!