The Local Rent-To-Own Store Offers You the Following Plan to Purchase

question 14

Short Answer

The local Rent-to-Own Store offers you the following plan to purchase a washing machine. The washing machine retails for $850, but you will have three years to pay it off using a simple interest loan. If you pay back $1400, then what was the APR on this loan? Give your answer as a percentage rounded to the nearest tenth of a percent.

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Definitions:

Realized Gross Profit

The difference between the cost of goods sold and the sales revenue received, specifically referring to profit that has been recognized once a transaction is completed.

Initial Franchise Fees

The upfront cost paid by a franchisee to a franchisor to enter into a franchise agreement, typically covering training, support, and the right to use trademarks.

Revenue Recognition

The accounting principle that determines the specific conditions under which income becomes recognized as revenue.

Installment Sales Method

An accounting method used to recognize revenue from sales where payment is received in installments over a period.