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The annual percent rate(APR) to purchase a living room set for $4,900 at 8% add-on interest for 4 years is 8. 6
How to calculate the annual interest rate
Using the formula
APR = ((Interest + Fees / Loan amount) / Number of days in loan term)) x 365 x 100
Note that Interest expense = Original amount / interest rate
Interest amount = $4, 900
Rate = 8% = 0. 08
Interest expense = $4, 900× 0. 08 = $392
Loan amount is also the principal amount , P = I / (RT)
where I is Interest Amount, R is Rate of Interest and T is Time Period.
Principal amount = $4, 900 ÷ 0. 08 × 4 = $4, 900 ÷ 0.32 = $ 15,313. 5
Substitute the values into the formula for APR
APR = [tex]\frac{392+ 4900}{15312.5} / 1460 * 365* 100[/tex]
APR = [tex]0.345 / 1460 *365*100[/tex]
APR = [tex]2. 36* 10^-4 *365* 100[/tex]
APR = [tex]8. 625[/tex]
To the nearest tenth is, 8. 6
Therefore, the annual percent rate(APR) is 8. 6
Learn more about Annual percent rate here:
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