BUSINESS HIGH SCHOOL

David is buying a new car for $21,349.00. He plans to make a down payment of $3,000.00. If he's tomake monthly payments of $352 for the next five years, what APR has he paid?
A. 5%
B. 59%
C. .05%
D. 5.9%

Answers

Answer 1

Answer:

Answer: (D) 5.90%

Explanation: David is going to buy a new car at $21,349.

The down payment is $3,000.

Loan amount (Present value) = $21,349 - $3,000

Loan amount (Present Value) = $18,349

Installment amount (pmt) = $352

As the payment is made monthly (12 months in a year),

Number of payments = 5 * 12

Number of payments = 60

Using the rate option in excel,

Insert the variables into the option, we get

$=rate(60,352,-18349)$

By inserting the above formula in excel we get,

Rate = 0.47%

Rate of 0.47% is monthly, to get APR

$APR = (1+monthly rate)^12 - 1$

$APR = (1+0.0047)^12 - 1$

$APR = (1.0047)^12 -1$

$APR = 1.0586 - 1$

APR = 0.0586

APR = 5.86% or 5.90%

Therefore the correct option is 5.90%.

Answer 2

Answer:

If David makes monthly payments of $352 for the next five years, he will pay APR ( Annual Percentage Rate) of 5.9%.

Hence, the correct option is D.

Here's the detailed calculation:

The total amount of the loan is $21,349 - $3,000 = $18,349.

The total interest paid over the life of the loan is $352 × 12 × 5 = $21,120.

The APR is 21,120 / 18,349 × 100 = 5.9%.

So, David has paid an APR of 5.9% on his car loan.

Learn more about Annual Percentage Rate here: brainly.com/question/28347040

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Answers

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