Question

Luci bought a $1,980 dress on an installment plan. the installment agreement included a 10% down payment and 18 monthly payments of $116 each. what is her finance charge. (3.1)

Answer 1

Luci's finance charge for the dress bought on an installment plan is $306, calculated by taking the total payments including the down payment and subtracting the actual price of the dress.

Step-by-step explanation:

The question is asking to calculate the finance charge on a $1,980 dress that Luci bought on an installment plan. To find the finance charge, first calculate the total amount paid over the term of the loan and subtract the original cost of the item.

First, calculate the down payment:
10% of $1,980 = 0.10 × $1,980 = $198

Next, calculate the total amount paid through monthly installments:
18 payments of $116 each = 18 × $116 = $2,088

Now, add the down payment to the total payments:
$198 + $2,088 = $2,286

Finally, determine the finance charge by subtracting the original price of the dress from the total amount paid:
Finance charge = $2,286 - $1,980 = $306

Thus, Luci's finance charge for the dress is $306.