Your uncle lends you $2,000 less $100 (interest at 5 percent), and you receive $1,900. Use the APR formula to find the true annual percentage rate. Assume you repay the entire loan in one year

APR = 5.263%

Explanation:

Computation of the true annual percentage rate

Using the APR formula to find the true annual percentage rate

APR = (2 * n * I) / [P * (N + 1) ]

Hence;

APR = (2 * 1 * $100) / [$1,900 * (1 + 1) ]

APR=$200 / ($1,900*2)

APR=$200/$3,800

APR = 0.05263 * 100

APR = 5.263%

Therefore the true annual percentage rate using the APR formula will be 5.263%