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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

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

$12,300 5% ______ 9% 36 _______ _______

To determine

To calculate: The amount financed, the finance charge and the monthly payment for the installment where purchase price is $12,300, down payment is 5%, add-on interest is 9% and number of payments is 36.

Explanation

Given Information:

The amount of purchase price is $12,300, down payment is 5%, add-on interest is 9% and number of payments is 36.

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 $12,300, down payment is 5%, add-on interest is 9% and number of payments are 36.

Compute amount financed by substituting purchase price equals to $12,300 and down payment equals to 5%,

Amount financed=Purchase price(100%Down payment percent)=$12,300(100%5%)=$12,300×95%=$11,685

Hence, amount financed is $11,685

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

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