Certainly! Let's break down the problem step by step:
### Step-by-Step Solution
#### 1. Determine the Finance Charge
Lisa borrows [tex]$5,000 at a 5 percent add-on rate for one year.
To find the finance charge:
- We need to multiply the borrowed amount by the add-on rate.
\[ \text{Finance Charge} = \text{Borrowed Amount} \times \text{Add-On Rate} \times \text{Term} \]
Given:
- Borrowed Amount = \$[/tex]5,000
- Add-On Rate = 5\% = 0.05
- Term = 1 year
Let's calculate the finance charge:
[tex]\[ \text{Finance Charge} = 5000 \times 0.05 \times 1 \][/tex]
[tex]\[ \text{Finance Charge} = 250 \][/tex]
So, the finance charge is \[tex]$250.
#### 2. Calculate the APR (Annual Percentage Rate)
Annual Percentage Rate (APR) is given by:
\[ \text{APR} = \left( \frac{\text{Finance Charge}}{\text{Borrowed Amount}} \right) \times \frac{1}{\text{Term}} \times 100\% \]
Using the values we have:
\[ \text{APR} = \left( \frac{250}{5000} \right) \times 1 \times 100\% \]
Let's simplify this step-by-step:
\[ \text{APR} = \left( 0.05 \right) \times 100\% \]
\[ \text{APR} = 5\% \]
So, the APR is 5%.
### Conclusion
1. Finance Charge: \$[/tex]250
2. APR: 5%
The correct answers matching the given choices are:
- Finance Charge \$250 - APR 5%
None of the given choices in the question match these correct values exactly, however, this is the accurate calculation based on the provided terms.
