You are borrowing $4,000 to purchase a HD plasma TV using a 36 month installment plan. Determine the annual percentage rate (APR) using the APR formula given that the interest charge is $782.96. Round your answer to the nearest whole percent. a. 0.1196% c. 12% b. 11.50% d. 13%

Annual Percentage rate (APR) is calculated by the formula:

APR = 72i / {3P (n+1) + i (n-1) }

where:

i = Interest Rate

P = principal amount borrowed

n = number of months of the loan

Given:

Interest rate = $782.96

Principal amount = $4,000

number of months = 36 months

Substitute the given to the formula:

APR = 72 (782.96) / [{3 (4000) (36+1) } + {782.96 (36-1) }]

APR = 56,373.12 / {444,000 + 27,403.60}

APR = 56,373.12 / 471,403.60

APR =.1196 X 100 ⇒ Multiply by 100 to get the percentage

APR = 11.96% or 12% (c)