Answer Happy

You're borrowing $4,000 for a year and a half with a stated annual interest rate of 10%. Complete the following table. (Note: Round your answers to the nearest dollar.) Principal $4,000 Finance charges $ Loan disbursement $ Total payback $ Annual Percentage Rate (APR) You also want to calculate the APR (annual percentage rate) and compare it to the stated interest rate. by the life of the loan, which is a year and a First, compute the average annual finance charge by dividing the total finance charge of $ half (1.5 years) = $ (Note: Round your answers to the nearest dollar.) APR = Average Annual Finance Charge Average Loan Balance Outstanding Next, as a single-payment loan, the average loan balance outstanding is constant at the , in this case, principal loan disbursement Complete the calculation. (Note: Round your answers to the nearest dollar and your percentage point to the nearest two decimal places.) APR Average Annual Finance Charge / Average Loan Balance Outstanding $ S lower than the same as % The APR is higher than the stated interest rate because the O Term of the loan s more than six months O Formula to compute finance charges is the same for the discount and simple interest methods O Loan is a single-payment loan O Discount method was used to calculate finance charges