THE ANNUAL PERCENTAGE RATE

APR stands for Annual Proportion Ratio.

False

The finance charge you will pay in dollars is the only thing you need to know about a loan.

False

Using the examples above, answer the following questions. Bob Borrower purchased a television for $299.95. He paid 25% down and agreed to pay $21.59 for 12 months.

His 25% down payment was $74.99 So he will finance $224.96 At the end of one year, his monthly payments will total $259.08 To the nearest tenth, his APR will equal 15.2%

Using the examples above, answer the following questions. Alice Buyer purchased a computer for $345.95. She paid $100.00 down and agreed to pay $22.92 for 12 months.

She will finance $245.95 At the end of one year her monthly payments will total $275.04 To the nearest tenth, her APR will equal 11.8%

Using the examples above, answer the following questions. Paula Purchaser borrowed $500 at 12 percent for one year. She paid a $25 processing fee.

The interest paid will be $60 Thus, the total finance charge (the interest plus the processing fee) will be $85 Therefore, the APR = total finance charge ÷ amount borrowed = 17%

Tim Worker buys a satellite dish for $329.99. He pays 10% down and takes an installment loan to complete the purchase. He makes 12 payments which include his principal and a $40.00 finance charge. What is the APR on his loan?

Tim will pay ($329.99 x 10%) or $33 (to the nearest whole number) for his down payment. He will finance ($329.99 - down payment) or $296.99 Tim will repay finance amount ÷ 12 plus $40.00 ÷ 12 or monthly payment of $28.08 At the end of one year Tim will have paid monthly payments totaling $336.96 The APR = finance charge for one year ÷ amount financed = 13.5% (to the nearest tenth).

Using a calculator and the above formula what is the APR. Choose the correct answer. Jim Tree buys his stock on credit at 14%.

To the nearest tenth, APR = 14.9%

Using a calculator and the formula above, calculate the APR. Choose the correct answer. Betty Buyer has a short term note at 16% interest per year.

To the nearest tenth, APR = 17.2%

Using a calculator and the formula above, calculate the APR. Choose the correct answer. Sam Seller offers credit at 19% interest per year.

To the nearest tenth, APR = 20.7%

The APR can be used to compare different loans.

True