Karla borrowed $750 at 12 percent for one year. She paid a $20 processing fee.
The interest paid will be $95.00, $92.50, or $90.00
Thus, the total finance charge (the interest plus the processing fee) will be? $115.00, $112.50, or $110.00 ?
Therefore, to the nearest tenth, the APR = total finance charge (divided by) amount borrowed = 14.7%, 14.3%, or 13.9% ?
Thanks much.
To calculate the interest paid, we can use the simple interest formula:
Interest = Principal x Rate x Time
In this case, the principal (amount borrowed) is $750, the rate is 12%, and the time is one year. So,
Interest = $750 x 0.12 x 1 = $90
Therefore, the interest paid is $90.
To find the total finance charge, we need to add the interest paid to the processing fee, which is $20:
Total Finance Charge = Interest Paid + Processing Fee = $90 + $20 = $110
Therefore, the total finance charge is $110.
To find the Annual Percentage Rate (APR), we can use the formula:
APR = (Total Finance Charge / Amount Borrowed) x 100
In this case, the total finance charge is $110 and the amount borrowed is $750:
APR = ($110 / $750) x 100 = 14.7 (rounded to the nearest tenth)
Therefore, the APR is approximately 14.7%.