Given: Ted Borrowed $1200 for two years and made monthly payments. The total finance charge is $175.92
Required: To determine the Annual Percentage Rate.
Explanation: The formula for APR is as follows-
[tex]APR=\lbrace\frac{(Fees+Interest)}{\frac{Principal}{n}}\frac{}{}\times365\rbrace\times100[/tex]where n is the total number of days in the loan term.
Here, the total finance charge is $175.92, and the Principal amount is $1200.
Also, n=2 years or 730 days. Substituting these values into the formula as-
[tex]APR=(\frac{175.92}{\frac{1200}{730}}\times365)\times100[/tex]Further solving as-
[tex]APR=7.29\%[/tex]Final Answer: The Annual Percentage Rate is 7.29%
