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27 March, 20:28

You take out an installment loan to purchase a fishing boat costing $3,900. You make a down payment of $1,000 and finance the balance by making monthly payments of $100.53 for 36 months. Use the APR formula to find the APR.

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  1. 27 March, 20:57
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    APR formula = (Finance charges/total balance) x 365

    Purchase price = $3,900

    Downpayment = $1,000

    Total financed = $2,900

    Payments (36m) = $100.53

    Total amount = $3,619.08

    APR formula = (Finance charges/total balance) x 365

    APR = ($3619.08/2900) x 365

    APR = 4.5%
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