Tim Houston purchased a wall unit for $2,400. He made a $600 down payment and financed the balance with an installment loan for 48 months. If Tim's payments are $43.50 per month, use the APR formula to calculate what annual percentage rate he is paying on the loan. (Round your answer to two decimal places.)

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A:

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.