Question

Travis Whitaker borrows $2,000 at an 8 percent add-on rate for two years. What is the finance charge?

Answer 1

$320.00 is the finance charge for Travis Whitaker.

Step-by-step explanation:

A finance charge is any fee representing the cost of credit, or the cost of borrowing. It is the interest added on, and some forms of credit, fees charged for. A finance charge includes not only interest but other charges as well, such as “financial transaction fees”.

Travis Whitaker borrows = $2000 for 2 years

Rate = 8% = 0.08

`\text { Year }=2 \text { year }=365 * 2=730 \text { days }`

Finance charge = (average balance × annual percentage rate × number of days in the billing cycle)

`\text { Finance charge }=(\$ 2000 * 0.08 * 2)`

`\text { Finance charge }=\$ 320`

The finance charge is $320.00.