Question

The cash price of a stove was $850. The customer agreed to pay $127.50 as a down payment. The remainder will be paid in 18 monthly installments of $46.79 each. What is the amount of the finance charge?

Answer 1

The price of the stove = $850

The payment down = $127.50

We will subtract 127.50 from 850 to find the rest amount should be paid

850 - 127.50 = $722.5

The remainder = $722.50

The value of each installment = $46.79

For 18 month

The amount of installments = 18 * 46.79 = $842.22

the finance charge is the difference between the total installments and the remainder

Finance charge = 842.22 - 722.50 = $119.72

The finance charge is $119.72