Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are taking out a single payment loan that uses the simple interest method to compute the finance charge. You need to figure out what

image text in transcribed
image text in transcribed
You are taking out a single payment loan that uses the simple interest method to compute the finance charge. You need to figure out what your payment will be when the loan comes due. The equation to calculate the finance charge is: F. -Amount of loan Interest Rate Term of Loan where F, is the finance charge for the loan, and the term of the loan is in You're borrowing $10,000 for two years with a stated annual interest rate of 8%. Complete the following table. (Note: Round your answers to the nearest dollar.) $10,000 Principal Finance charge s Total Payback $ Annual Percentage Rate (APR) You also want to calculate the APR (annual percentage rate) and compare it to the stated interest rate. First, compute the average annual finance charge by dividing the total finance charge by the life of the loan, which is wears (2.0 years). Enter the value in the following equation. (Note: Round your answers to the nearest dollar) Annual Percentage Rate (APR) You also want to calculate the APR (annual percentage rate) and compare it to the stated interest rate First, compute the average annual finance charge by dividing the total finance charge by the life of the loan, which is two years (2.0 years) Enter this value in the following equation. (Note: Round your answers to the nearest dollar.) Next, as a single-payment loan, the average loan balance outstanding is constant at $10,000. Complete the calculation for APR and enter it in the Following equation. (Note: Round your answers to the nearest dollar or whole percentage point) APR Average Annual Finance Charge / Average Loan Balance Outstanding / $10,000 % The stated interest rate and APR are because the: O Simple interest method was used to calculate finance charges O Term of the loan is fewer than five years Loan is a single-payment loan

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Full IFRS And IFRS For SMEs Adoption By Private Firms Empirical Evidence On Country Level

Authors: Maximilian Saucke

1st Edition

363166298X,3653055318

More Books

Students also viewed these Finance questions

Question

How did you find the answer of $46,700? This chapter confuses me.

Answered: 1 week ago