B24: I can use a table to find the annual percentage rate of a loan.

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Presentation transcript:

B24: I can use a table to find the annual percentage rate of a loan.

What is the annual percentage rate (APR)? Example 1 Installment loan of $5,000 Finance charge of $580 Monthly payments: 24 What is the annual percentage rate (APR)?

How do we find the APR? Finance Charge = $100 x Finance Charge Per $100 Amount Financed First we will divide the finance charge by the amount financed: $580 ÷ $5000 = 0.116

Next we will multiply the result x $100 Then we will look on p. 794-795 in the textbook to find the closest value to $11.60 in the table. Remember the number of monthly payments is 24.

The closest value in the table is $11.58. The APR that corresponds to this value is 10.75%

You try this one: Installment loan of $7,200 Finance charge of $1,008 Monthly Payments: 36 What is the APR?

Closest in the table is $14.06 APR is 8.75% Did you get…. 1008 ÷ 7200 = 0.14 0.14 x $100 = $14 Closest in the table is $14.06 APR is 8.75%

B24: I can use a table to find the annual percentage rate of a loan.