How to calculate annual percentage rate

Discussion in 'General Chat' started by kyleb, Mar 20, 2009.

  1. kyleb

    kyleb New Member

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    Hi all.

    This post will teach you how to calculate the annual percentage rate. I will use an example to assist us.

    Say you have these loan terms:

    So let's say we borrow $500 for 1 year. Assuming that we pay it all off then, here is what the loan looks like.

    Amount borrowed: $500
    Length (in years): 1
    Monthly payment: $50
    Number of payments: 12
    Total interest: $100 (($50 * 12) - $500)
    Total loan cost: $600 ($50 * 12)

    To calculate the APR, divide the total interest by the total loan cost and multiply by 100. In this example, the answer is 16.66% APR.

    Generally, an stated APR means that you are paying that much cents each dollar borrowed or that much dollars each 100 dollars borrowed.
     
    Last edited: Mar 20, 2009
  2. VamPyroX

    VamPyroX bloody phreak from hell

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    I remember this from my business courses at RIT. :)
     
  3. CaoYi

    CaoYi New Member

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    The answer is 16.66% = (($50 * 12 -$500) / ($50 * 12)) * 100% APR.
     
  4. Avoc

    Avoc New Member

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