What effective annual interest rate is being charged

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Reference no: EM131493015

Jones Auto Sales calculates its “4%” ?nancing as follows. If $3600 is borrowed to be repaid over a 3-year period, the interest charge is ($3600)(0.04)(3 years) = $432. The $432 of interest is deducted from the $3600 loan and the customer has $3168 toward the cost of a car. The customer must repay the loan with 1/36 of $3600, or $100, monthly payments for 36 months. What effective annual interest rate is being charged?

Reference no: EM131493015

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