4. Laura paid $1100 down on a $5400 purchase and agreed to pay the balance at a 7% add-on rate for 2 years. Find th...

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4. Laura paid $1100 down on a $5400 purchase and agreed to pay the balance at a 7% add-on rate for 2 years. Find the APR for

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Answer 1

Answer #1

Here loan amount is 5400-1100=4300

Add-on rate for 2 years will be 7%

Amount to be repaid after 2 years will be

4300*107% will be due in the first year i.e. 4601

This will become principle for second year

Reapayable after second year will be 4601*107%=4903.07

Actual principal amount is 4300

Repaid after 2 years 4923.07

Interest= 4923.07-4300=623.07

Interest= 4300*2*r/100

623.07=4300*2*r/100

Apr=7.245%

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Answer 2

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