Question

Anthony purchased a $209 stereo system at wrigley's department store. he paid $43 down and agreed to pay the balance in 12 equal monthly payments. the finance charge was 9.5% simple annual interest. what was the amount of each payment?

Answer 1

Anthony should pay approximately $15.15 per month for 12 months to pay off the balance for the purchased stereo system after a $43 down payment and a 9.5% annual finance charge.

Step-by-step explanation:

The question at hand involves determining the amount of each monthly payment Anthony must make to pay off the balance on a purchased stereo system after accounting for the down payment and the finance charge.

First, to find the amount financed, we subtract the down payment of $43 from the total cost of the stereo system, which is $209, resulting in a balance of $166 to be financed. To calculate the finance charge using simple interest, the formula is principal × rate × time, where the principal is $166, the rate is 9.5% (expressed as 0.095 in decimal form), and the time is 1 year (since the finance charge given is annual).

Therefore, the finance charge for 1 year is $166 × 0.095 × 1 = $15.77. Since Anthony will make payments for 1 year, we add this charge to the financed amount to get a total of $181.77. To find the monthly payment, we divide this total by 12 months, which gives us a monthly payment amount of approximately $15.15.