7. Calculating finance charges using the discount method and APRon a single-payment loan You are taking out a single-payment loan that uses the discount method to compute the finance charges. Computing the finance charges is done dirterently from the way they're computed using the simple interest method. Under the discount method, a borrower receives the principal the finance charges. For example, if the principal is $12,000 and the finance charges are $1,440, the borrower will receive $ 10,560 less The following equation computes the finance charges on your loan: F -F.-PXX In the equation, is the finance charge for the loan, What are the other values? P is the principal amount of the loan r is the stated annual rate of interest t is the term of the loan in years You're borrowing $10,000 for two years with a stated annual interest rate of 6%. Complete the following table. (Note: Round your answers to the nearest dollar Principal Finance charges Loon disbursement Total payback $10,000 is S S Annual Percentage Rate (APR) You also want to calculate the APR (annual percentage rate) and compare it to the stated interest rate: APR = AwiChor Lee by the life of the loan, which is two years First, compute the average annual finance charge by dividing the total finance charge of (2.0 years) = (Note: Round your answers to the nearest dollar) Next, as a single-payment foon, the average loan balance outstanding is constant at the in this case First, compute the average annual finance charge by dividing the total finance charge of S (2.0 years) = (Note: Round your answers to the nearest dollar) by the life of the loan, which is two years Next, as a single-payment loan, the average loan balance outstanding is constant at the in this case, s Complete the calculation. (Note: Round your answers to the nearest dollar and your percentage point to the nearest two decimal places) APR Average Annuel France Charge / Average Loan Balance Outstanding 1/5 $ % The APR IS the stated interest rate because the Discount method was used to calculate ninance charges Formula to compute finance charges is the same for the discount and simple interest methods Loon is a single-payment loan Term of the loan is more than six months