Question

Karen and Wayne need to buy a refrigerator because theirs just broke. Unfortunately,their savings account is depleted, and they will need to borrow money in order to buy a new one. Sears offers them an installment loan at 15% (add-on rate). If the refrigerator at Sears costs $1,500 plus 5% sales tax, and Karen and Wayne plan to pay for the refrigerator for 2 years, what is the monthly payment?

Answer 1

Answer:

$53.14

Step-by-step explanation:

Add-on-rate = 16%

Cost = $1,578 + Sales tax = 5%(5% of $1578 = $78.90)

Time = 3 years

Total amount borrowed = 1578 + 78.90 = $1656.90

Charges = 16%

So, 16% of 1656.90

= 16/100 * 1656.90

= $265.10

Total amount would be = 1656.90 + 256.10 = $1913

No. of months in 3 years = 36months

∴ Monthly payment = $\frac{1913}{36}$

= $53.14.