Edmond

Edmond Santos borrowed USD 20,000 for 18 months at 6 1/2 % per year. Find the APR (Annual Percentage Rate) if he repaid the loan monthly. The answer is:

Note: APR is expressed as a percentage representing the actual yearly cost of funds over a loan term.

Correct answer:

p =  5.2244 %

Step-by-step explanation:

$$\begin{gathered} m=6\frac{1}{2}=6+\frac{1}{2}=\frac{6\cdot 2+1}{2}=\frac{12+1}{2}=\frac{13}{2}=6.5\% \\ n=18\text{m} \\ a=20000\text{USD} \\ q=100\%+m\%=1+\frac{m}{100}=1.065 \\ s=1169.16\text{USD} \\ b=s\cdot n=1169.16\cdot 18=21044.88\text{USD} \\ p=100\cdot \frac{b-a}{a}=100\cdot \frac{\frac{526122}{25}-20000}{20000}=5.2244\% \end{gathered}$$

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