Question

antoni gaudi purchase a bedroom set with an installment loan that has an APR of 12%. The bedrooms that sells for $2650. The store financing requires a 15% down payment and 42 monthly payments. What is the finance charge?

Answer 1

Answer:

Total Finance cost $ 517

Step-by-step explanation:

Down payment paid = 15 % of $ 2650

                                  = (15 / 100 ) * 2650

                                 = $ 397.5

Amount left to be paid =  $2650 - $ 397.5

                                      = $ 2252.5

Since antoni gaudi purchase with an installment loan that has an APR of 12%

Monthly payment = $Loan * r / 12 * ( 1 + r/12) ^ n /( ( 1+ r/12) ^ n^- ^1)$

r = 12 % = 0.12

n = 42

Putting values we get,

Monthly Payment = $2252.5 * 0.12 / 12 * ( 1+ 0.12 / 12) ^ 4 ^2 / (( 1+ 0.12 / 12) ^ 4 ^2 ^-^1))$

Monthly payment = 65.94

Since payments are for 42 months so,

Total payments = 42 * 65.94

                          = $ 2769.48

Total Finance cost = Total payments  - Amount left to be paid

                               = 2769.48 - 2252.5

                               = 516.98

                               =~ $ 517