# Annual Percentage Rate

#### Explain this!

##### Junior Member
The cash price for an air condition is $150.00. The installment price is$170.10, payable in 18 equal monthly payments. What annual percentage rate is paid by the installment purchaser?
The amount financed per $100.00 is$20.10 divided by $150.00 multiplied by$100.00. The amount is \$13.40. This amount is needed to determine the finance charge.

The answer is 16.25%, This percentage is found by using an APR table. My question is as follows:

How can the APR of 16.25% be determined by using a calculation?

#### JeffM

##### Elite Member
It can’t. It can be approximated using numerical methods, which is how your table is constructed.

#### Explain this!

##### Junior Member
It can’t. It can be approximated using numerical methods, which is how your table is constructed.
Do all APR tables use the same calculation method, or does each table us a different method?

#### Subhotosh Khan

##### Super Moderator
Staff member
Do all APR tables use the same calculation method, or does each table us a different method?
Those tables "most probably" use the same method - but - that method cannot be reduced to simply evaluating some algebraic expression.

#### JeffM

##### Elite Member
Numerical methods are sophisticated methods of trial and error. They differ primarily in how many calculations are required to get a good approximation.