Calculate the APR for a $2,500 loan to be repaid in 24 monthly payment of $122.

Use the example below to guide in calculating the APR (show your work):

So let's say we borrow $500 for 1 year. Assuming that we pay it all off then, here is what the loan looks like. Amount borrowed: $500 Length (in years): 1 Monthly payment: $50 Number of payments: 12 Total interest: $100 (($50 * 12) - $500) Total loan cost: $600 ($50 * 12) To calculate the APR, divide the total interest by the total loan cost and multiply by 100. In this example, the answer is 16.66% APR. Generally, an stated APR means that you are paying that much cents each dollar borrowed or that much dollars each 100 dollars borrowed.

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