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Kerri receives a loan for $3,000 with a $100 processing fee. The annual interest rate is 4 percent compounded monthly over one year. What is the approximate APR of the loan?

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Based on the interest rate, the loan amount, and the processing fee, the approximate APR is 3.70%

What is the approximate APR?

First, find the interest:

= 3,000 x (1 + 4/12%)¹²

= 3,122.22

Interest is:

= 3,122.22 - 3,000

= $122.22

The APR is:
= ((100 + 122.22) / 3,000) /2 x 1 x 100

= 3.70%

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