Solve the Problem

question 18

Multiple Choice

Solve the problem. Use the approximate APR formula to estimate the APR, and round rates to the nearest tenth of a percent.
-Doris White decided to get new appliances for her kitchen at a cost of $5900. She puts $700 down and will pay $137.75 per month for 48 months. Find the total installment cost, the finance charge, and the approximate annual percentage rate.

• A)Total: $7312.00
• Finance Charge: $1412.00
• APR: 13.3%
• B)Total: $6912.00
• Finance Charge: $1012.00
• APR: 9.7%
• C)Total: $6612.00
• Finance Charge: $712.00
• APR: 5.9%
• D)Total: $7312.00
• Finance Charge: $2112.00
• APR: 19.9%

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Definitions:

Economic Profits

Profits exceeding the normal return on investment, calculated by subtracting both explicit and implicit costs from total revenues.

Industry Expansion

The process of a sector growing in size, output, or number of entities, often due to increased demand or technological advancements.

Normal Profits

The level of profit necessary to cover the costs of the inputs owned by the firm, acting as the minimum earnings to keep the firm in business.

Competitive Equilibrium

A state in a market where supply equals demand, with no external influences altering the price or quantity.