   Chapter 13.II, Problem 12RE ### 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

# 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 12. $50,300 25% 12.4% 60 To determine To calculate: The amount financed, finance charge and monthly payment if purchase price is$50,300, down payment is 25%, add-on interest is 12.4% and number of payment is 60.

Explanation

Given Information:

The purchase price is $50,300, down payment is 25%, add-on interest is 12.4% and number of payment is 60. Formula used: Follow the steps to compute the monthly payment of installment through add-on interest method. Step 1: The amount financed can be computed by complement method as, Amount financed=Purchase price(100%Down payment percent) Step 2: The add-on interest finance charge is computed using I=PRT where P is principal, R is rate and T is time. Step 3: The total amount of installments payment is computed by adding the finance charge to the amount financed, Total amount of installment payments=Amount financed+finance charge Step 4: The regular monthly payments is computed by dividing the total amount of installment payments by the number of months of loan, Regular monthly payments=Total amount of installment paymentsnumber of months of the loan Calculation: Consider that purchase price is$50,300, down payment is 25%, add-on interest is 12.4% and number of payment is 60.

Compute amount financed by substituting purchase price to $50,300 and down payment percent to 25% in the below formula; Amount financed=Purchase price(100%Down payment percent)=50,300(100%25%)=50,300(75%)=$37,725

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