109k views
1 vote
Sam is paying off his eight-year, $15,360 loan in semiannual installments. The loan has an interest rate of 9.58%, compounded semiannually, and a service charge of $1,294.64. Once the loan has been fully paid off, what percentage of the total finance charge will the service charge be? Round all dollar values to the nearest cent.

a.
5.48%
b.
8.43%
c.
18.55%
d.
15.65%

2 Answers

2 votes

Answer is D

Good luck OWO

User Taylor Rose
by
7.8k points
4 votes
We are given with
P = $15,360
n = 8 years or 16 semi-annuals
r = 9.58% compounded semiannually
S = 1294.64

The future amount of the loan is
F = P (1 + i)^n
i should be the effective interest rate of r
n should be the number of payments

F = 15360 (1 + 9.58/2) ^16
Solve for F and divide by the service charge to the answer
User Dan Pichelman
by
8.2k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories