Question

question 26
use the windows calculator or click here for the apr calculator. dont worry, this question is set not to charge your quiz with a tab
calculate the approximate apr to two decimal places using the following information:
number of payment periods in one year: 12
finance charge: $72
principal: $900
total number of payments to pay off the loan: 12
□ 14.7%
□ 12.5%
☑ 8.1%
□ 6.9%

Explanation:

Step1: Recall APR formula

The approximate APR formula is \( APR \approx \frac{2 \times n \times FC}{P \times (N + 1)} \), where \( n \) is number of payment periods per year, \( FC \) is finance charge, \( P \) is principal, \( N \) is total number of payments.

Step2: Substitute values

Given \( n = 12 \), \( FC=\$72 \), \( P = \$900 \), \( N = 12 \).
Substitute into formula:
\( APR \approx \frac{2\times12\times72}{900\times(12 + 1)}=\frac{1728}{900\times13}=\frac{1728}{11700}\approx0.1477 \) or \( 14.77\% \).

Answer:

A. 14.77%