Homework Answers
The Formula to calculate Annual Percentage Rate (APR) is:
APR = Fees+InterestPrincipalnX
365X100
Where
Interest = Total interest paid over life of the loan
Principal = Loan amount
n=Number
of days in loan term
18 = 
n = 730 because the loan term is of 24 months or 2 years
18 = ![Interest Principal x 1 X100 )x 1] x10 2](http://img.homeworklib.com/questions/425c6d00-a5fa-11eb-a036-5f573ca73459.png?x-oss-process=image/resize,w_560)
18 = 
= 
Interest = (Monthly Payment X 24) x
Interest = (75 X 24) x 
Interest = 1800 x 
Interest = 274.58
= 
Principal =
Principal = 1525.44
Hence maximum purchase Carla can make given this credit approval is $ 1,525.44 on which She will have to pay total interest of $274.58 over a period of 24 months which brings her total payment to $1,800 divided into 24 monthly payments of $75 each.
This can also be calculated by a simpler method which is also mentioned as a bonus.
Interest = (Monthly Payment X 24) x
Interest = (75 X 24) x
Interest = 1800 x
Interest = 274.58
Principal = Total Payment – Interest
Principal = (75X24) – 274.58
Principal = 1800 – 274.58
Principal = 1525.42
:) Good Luck
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