A computer with software costs $2,929, and Catherine Stevens has agreed to pay a 20% per...
A computer with software costs $2,929, and Catherine Stevens has agreed to pay a 20% per year finance charge on the cash price. If she contracts to pay the loan in 18 months, how much will she pay each month?
Homework Answers
The cash price of the computer is $2929.
We will now find the percentage rate of the finance charge per 18 months.
Annual percentage rate = 20%
Rate per 18 months = {Annual percentage rate}{12}*18 = {20}{12}*18 = 30%
Finance charge = finance charge rate period * cash price
= 30% of $2965
=$889.5
Let’s find the installment price.
Installment price = finance charge + cash price
=889.55 + 2929
= 3818.5
Installment price = total of installment payments + down payment
There is no down payment; therefore we can use the formula below.
Total of installment payment = installment price = 3818.5
Finally, divide the total of the installment payments by the number of installments, 18.
Installment payment = total of installment payments/number of installments = {3818.5}/{18} = 212.1
So, her monthly payment is $212.10.
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