Calculate the Annual Percentage Rate for the Following Installment Loan

question 80

Short Answer

Calculate the annual percentage rate for the following installment loan using the APR formula, rounding dollars to the nearest cent and percents to the nearest hundredth. $$\begin{array} { l l l l l } \text { Amount } & \text { Number of } & \text { Monthly } & \text { Finance } & \\ \underline {\text { Financed } }& \ \underline {text { Payments } }& \underline { \text { Payment } } & \underline { \text { Charge } } & \underline {\text { APR }} \\\$ 18,600 & 72 & \$ 21.08 & &\end{array}$$

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Definitions:

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for financing payroll, accounts payable, and inventories.

Simple Interest

Interest that is computed solely on the initial sum invested or loaned, not taking into account any accumulated interest from previous periods.

Face Value

The nominal or dollar value printed on a security or financial instrument, representing its value upon maturity or redemption.

Treasury Bill

A short-term government security issued at a discount from the face value and yielding the face value upon maturity.