Contemporary Mathematics for Busin...

8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Calculate the amount financed, the finance charge, and the monthly payments. For the following add-on interest loans.

Purchase

(Cash) Down Amount Add-on Number of Finance Monthly

Price Payment Financed Interest Payments Charge Payment

$4,000 15% ___ 11 1 2 %

30 _ _____

To determine

To calculate: The amount financed, the finance charge and the monthly payment for the installment where purchase price is $4,000, down payment is 15, add-on interest is 11.5% and number of payments is 30.

Explanation

Given Information:

The amount of purchase price is $4,000, down payment is 15, add-on interest is 11.5% and number of payments are 30.

Formula used:

Follow the steps to compute the regular monthly payment of an installment loan using add-on interest.

Step 1: The amount financed is computed by complement method as the percentage financed is 100% minus the down payment percent.

Amount financed=Purchase price(100%−Down payment percent)

Step 2: Finance charge is computed by multiplying principle with rate and time with the amount financed as the principal.

I=P×R×T

Where, I is the finance charge, P is the amount financed, R is the rate of interest and T is the time.

Step 3: The total amount of installments payment is computed by adding amount financed and finance charge.

Total amount of installment payments=Amount financed+Finance charge

Step 4: The regular monthly payments is computed by dividing the total number of payments by total number of months of the loan.

Regular monthly payments=Total number of installment paymentsNumber of months of the loan

Calculation:

Consider that purchase price is $4,000, down payment is 15%, add-on interest is 11.5% and number of payments is 30.

Compute amount financed by substituting purchase price equals to $4,000 and down payment equals to 15%,

Amount financed=Purchase price(100%−Down payment percent)=$4,000(100%−15%)=$4,000×85%=$3,400

Hence, amount financed is $3,400

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Sect-13.I P-1TIE Sect-13.I P-2TIE Sect-13.I P-3TIE Sect-13.I P-1RE Sect-13.I P-2RE Sect-13.I P-3RE Sect-13.I P-4RE Sect-13.I P-5RE Sect-13.I P-6RE Sect-13.I P-7RE

Sect-13.I P-8RE Sect-13.I P-9RE Sect-13.I P-10RE Sect-13.I P-11RE Sect-13.I P-12RE Sect-13.I P-13RE Sect-13.I P-14RE Sect-13.I P-15RE Sect-13.I P-16RE Sect-13.I P-17RE Sect-13.I P-18RE Sect-13.II P-4TIE Sect-13.II P-5TIE Sect-13.II P-6TIE Sect-13.II P-7TIE Sect-13.II P-8TIE Sect-13.II P-9TIE Sect-13.II P-1RE Sect-13.II P-2RE Sect-13.II P-3RE Sect-13.II P-4RE Sect-13.II P-5RE Sect-13.II P-6RE Sect-13.II P-7RE Sect-13.II P-8RE Sect-13.II P-9RE Sect-13.II P-10RE Sect-13.II P-11RE Sect-13.II P-12RE Sect-13.II P-13RE Sect-13.II P-14RE Sect-13.II P-15RE Sect-13.II P-16RE Sect-13.II P-17RE Sect-13.II P-18RE Sect-13.II P-19RE Sect-13.II P-20RE Sect-13.II P-21RE Sect-13.II P-22RE Sect-13.II P-23RE Sect-13.II P-24RE Sect-13.II P-25RE Sect-13.II P-26RE Sect-13.II P-27RE Sect-13.II P-28RE Sect-13.II P-29RE Sect-13.II P-30RE Sect-13.II P-31RE Sect-13.II P-32RE Sect-13.II P-33RE Sect-13.II P-34RE Sect-13.II P-35RE Sect-13.II P-36RE Sect-13.II P-37RE Sect-13.II P-38RE Sect-13.II P-39RE Sect-13.II P-40RE Sect-13.II P-41RE Sect-13.II P-42RE Sect-13.II P-43RE Sect-13.II P-44RE Sect-13.II P-45RE Sect-13.II P-46RE Sect-13.II P-47RE Sect-13.II P-48RE Sect-13.II P-49RE Sect-13.II P-50RE Sect-13.II P-51RE Sect-13.II P-52RE Sect-13.II P-53RE Sect-13.II P-54RE Sect-13.II P-55RE Ch-13 P-1CR Ch-13 P-2CR Ch-13 P-3CR Ch-13 P-4CR Ch-13 P-5CR Ch-13 P-6CR Ch-13 P-7CR Ch-13 P-8CR Ch-13 P-9CR Ch-13 P-10CR Ch-13 P-11CR Ch-13 P-12CR Ch-13 P-13CR Ch-13 P-14CR Ch-13 P-1AT Ch-13 P-2AT Ch-13 P-3AT Ch-13 P-4AT Ch-13 P-5AT Ch-13 P-6AT Ch-13 P-7AT Ch-13 P-8AT Ch-13 P-9AT Ch-13 P-10AT Ch-13 P-11AT Ch-13 P-12AT Ch-13 P-13AT Ch-13 P-14AT Ch-13 P-15AT

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Contemporary Mathematics for Busin...

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Contemporary Mathematics for Busin...

Calculate the amount financed, the finance charge, and the monthly payments. For the following add-on interest loans. Purchase (Cash) Down Amount Add-on Number of Finance Monthly Price Payment Financed Interest Payments Charge Payment $4,000 15% _______ 11 1 2 % 30 _______ _______

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Advanced Math Contemporary Mathematics for Business & Consumers 8th Edition

Calculate the amount financed, the finance charge, and the monthly payments. For the following add-on interest loans.

Purchase

(Cash) Down Amount Add-on Number of Finance Monthly

Price Payment Financed Interest Payments Charge Payment

$4,000 15% ___ 11 1 2 %

30 _ _____