anna bought a tablet which cost $299. she paid a finance charge of $58 and paid for 12 months. what is her…

anna bought a tablet which cost $299. she paid a finance charge of $58 and paid for 12 months. what is her approximate apr? 25.2% 20.8% 19.4% 18.0%

anna bought a tablet which cost $299. she paid a finance charge of $58 and paid for 12 months. what is her approximate apr? 25.2% 20.8% 19.4% 18.0%

Answer

Explanation:

Step1: Calculate the amount financed

The amount financed is the cost of the tablet, which is $299.

Step2: Use the simple - interest formula for APR approximation

The formula for approximating APR is $APR=\frac{2\times n\times I}{P\times(n + 1)}$, where $n$ is the number of payments, $I$ is the total finance charge, and $P$ is the amount financed. Here, $n = 12$, $I=58$, and $P = 299$. [ \begin{align*} APR&=\frac{2\times12\times58}{299\times(12 + 1)}\ &=\frac{1392}{299\times13}\ &=\frac{1392}{3887}\ &\approx0.358\times100%\ &\approx 20.8% \end{align*} ]

Answer:

20.8%