Ramon Hernandez saw the following advertisement for a used Volkswagen Bug and de

Question

Ramon Hernandez saw the following advertisement for a used Volkswagen Bug and decided to work out the numbers to be sure the ad had no errors. Cash price $7,820 Down payment $0 Annual percentage rate 15.03% Deferred price $11,176.80 or 60 payments at $186.28 per month a. Calculate the amount financed Amount financed"-S[ 78201 b. Calculate the finance charge. (Do not round intermediate calculations. Round your answer to the nearest cent.) Finance change 3356.8 c. Calculate the APR by formula. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 1 decimal place.) APR by formula

Explanation / Answer

Given 60 monthly patments i.e. 5 years 5 year rate = Finance charge / Loan amount x 100 = 3356.8/7820 x 100 = 42.926% APR = 42.926 X 1/5 = 8.5852% Please provide feedback…. Thanks in advance…. :-)

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