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Joshua borrowed $1,000 on January 1, 2021, and paid $100 in interest. The bank charged him a service charge of $10. He paid it all back at once on December 31, 2021. What was the APR

Respuesta :

The annual percentage rate so calculated in the given case is equal to 11 percent.

What is the formula for Annual Percentage Rate?

The Annual Percentage Rate(APR) is calculated by dividing the finance cost by the total amount borrowed in the following manner:

[tex]\rm\, APR = \frac{Finance \,Charge}{Amount\, Borrowed}[/tex]

To know the amount of the Finance charge, we have to add the interest and the service charge.

Finance charge = $100 + $10

Finance charge = $110

[tex]\rm\, APR = \frac{Finance \,Charge}{Amount\, Borrowed}\\\\\rm\, APR = \frac{\$110}{\$1,000}\\\\APR = 11\%[/tex]

Hence, The annual percentage rate is equal to 11%.

Learn more about the Annual percentage rate:

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