Answer:
The actual APR (annual percentage rate) that you are paying is 12.69%.
Explanation:
The actual annual percentage rate (APR) can be calculated using the Annual Percentage Rate (APR) formula as
follows:
APR = (((Fees + Interest accrued) / Principal / n) * Number of months in a year) * 100 ……………… (1)
Where;
APR = ?
Fees = Credit investigation charged = $200
Principal = Amount borrowed = $10,000
Total accrued amount = Principal * (1 + (Monthly interest rate * Number of months of loan tenure)) = $10,000 * (1 + (1% * 35)) = $13,500
Interest accrued = Total accrued amount - Principal = $13,500 - $10,000 =$3,500
n = Number of months of loan term = 35
Number of months in a year = 12
Substituting the values into equation (1), we have:
APR = (((200 + 3500) / 10000 / 35) * 12) * 100
APR = 12.69%
Therefore, the actual APR (annual percentage rate) that you are paying is 12.69%.
