Explain why that is false. Find the annual interest rate compounded monthly that is actually being charged for financing ​$17,475 with 72 monthly payments of ​$299.

Question

The ad for a​ 4-door sedan claims that a monthly payment of ​$299 constitutes​ 0% financing. Explain why that is false. Find the annual interest rate compounded monthly that is actually being charged for financing ​$17,475 with 72 monthly payments of ​$299.

NEW​ 4-DOOR SEDAN!

Zero down​ - 0% financing

​$299 per​ month*

Buy for ​$17,475.

​*4-door sedan,​ 0% down,​ 0% for 72 months

The advertisement is​ false, because for​ 0% financing, the monthly payments should be ​$ _____________​, not ​$299.

​(Round to the nearest cent as​ needed.)

Answer 1

You don't even need the formula. Paying the amount over 72 months with no financing means dividing the amount by the number of months for your payment.

17475/72 = your answer

Don't forget to round the cents.