   Chapter 13, Problem 13AT ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# An Auntie Anne’s franchise financed a $68,000 pretzel oven with a 6 1 2 % add-on interest installment loan for 48 months. The loan required a 20 % down payment.a. What is the finance charge on the loan?b. What are the monthly payments?c. What annual percentage rate is being charged on the loan?d. If the company decides to pay off the loan after 22 months, what is the loan payoff? (a) To determine To calculate: The finance charge if Auntie Anne’s franchise financed a$68,000 pretzel oven with an 612% add-on interest installment loan for 48 months (4 years) and down payment is 20%.

Explanation

Given Information:

Auntie Anne’s franchise financed a $68,000 pretzel oven with an 612% add-on interest installment loan for 48 months (4 years) and down payment is 20%. Formula used: Finance charge can be computed by multiplying interest, rate and time: Interest=Principal×Rate×Time Where, interest is finance charge and principal are amount financed Calculation: Consider purchase price is$68,000, the number of payments is 48 months (4 years), add-on interest is 612% and down payment is 20%.

Compute the amount financed by substituting purchase price to $68,000 and down payment to 20%. Amount Financed=Purchase(100%Down payment percent)=68,000(100%20%)=68,000(0 (b) To determine To calculate: The monthly payments if Auntie Anne’s franchise financed a$68,000 pretzel oven with an 612% add-on interest installment loan for 48 months (4 years) and down payment is 20%. Amount financed is $54,000 and finance charge is$14,144.

(c)

To determine

To calculate: The annual percentage rate if Auntie Anne’s franchise financed a $68,000 pretzel oven with a 612% add-on interest installment loan for 48 months (4 years) and down payment is 20%. Amount financed is$54,000 and finance charge is $14,144. (d) To determine To calculate: The loan payoff if Auntie Anne’s franchise financed a$68,000 pretzel oven with a 612% add-on interest installment loan for 48 months (4 years) and down payment is 20%. Amount financed is $54,000 and finance charge is$14,144. Monthly payment is \$1,428 and number of payments made is 22 months.

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