Use an annual percentage rate table to solve the problem 8 T

****Use an annual percentage rate table to solve the problem. 8) The Wilsons want to remodel their kitchen. The total costs of the renovations is $38,500. They paid 25% down and then paid 60 monthly payments of $592.41. a. How much interest did the homeowner pay for the loan? (3 points) b. Determine the APR of the loan to the nearest one-half of a percent. (4 points)

Solution

Interest paid=60*592.41-38500*0.75=6669.6

APR of the loan using financial calculator

N=60

PMT=-592.41

PV=38500*0.75

FV=0

CPT I/Y=0.708%

Hence, APR=0.708%*12=8.496%