Final answer:
The statement is false; the actual finance charge for a $7,000 loan at 6% APR over two years is $840, not $310.24.
Step-by-step explanation:
To determine if the finance charge for a $7,000 two-year loan with 6% APR is $310.24 is true or false, we need to calculate the total interest charged over the life of the loan. For a simple interest loan, the formula to compute the interest is:
Interest = Principal × Rate × Time
In this case, the principal (P) is $7,000, the annual interest rate (R) is 6%, and the time (T) is 2 years. Plugging these values into the formula gives us:
Interest = $7,000 × 0.06 × 2
This results in an interest amount of $840 over the two-year period. Therefore, the statement that the finance charge is $310.24 is false, as the correct finance charge with these parameters would be $840.