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The APR for the loan described below. purchase a living room set for $3,500 at 10% add-on interest for 3 years is 19.5%.
Define annual percentage rate.
An annual percentage rate, or APR, is a figure that expresses the entire cost of borrowing money as a proportion of the loan's principle. An accurate picture of how much it costs to borrow money is intended to be provided by the APR on a loan or credit card. The annual interest produced by a sum that is paid to investors or charged to borrowers is referred to as the annual percentage rate (APR) , APR is a percentage that expresses the actual annual cost of borrowing money throughout the course of a loan or the revenue from an investment.
Given,
The following formula can be used to determine the annual percentage:
APR = 2Nr/N+1
N = number of payments,
Time is 12 x 3 years, or 36 months.
add-on interest rate (r) = 10% = 0.10
When we substitute our value to determine the APR, we obtain:
APR = 2 × 36×0.10/36+1
APR = 7.2/37
APR = 0.1945
APR = 19.5%
The APR for the loan described below. purchase a living room set for $3,500 at 10% add-on interest for 3 years is 19.5%.
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