Question

Harry Potter purchases a new broom called The Firebolt that sells for $3,200, including tax. It requires a $201 down payment. The remainder, plus a finance charge, is paid back monthly over the next two and a half years. The monthly payment is $114. What is the finance charge? (Do not include the $ symbol or .00 in your answer)

Answer 1

Answer: 210

Explanation: The total amount to be paid back is the selling price of the broom plus the finance charge, which is:

$3,200 + finance charge

The down payment of $201 is subtracted from this amount, leaving the balance to be paid back over 30 monthly payments:

$3,200 + finance charge - $201 = $2,999 + finance charge

Each monthly payment is $114, so the total amount paid over 30 months is:

30 x $114 = $3,420

This includes both the amount borrowed ($2,999 + finance charge) and the finance charge, so we can set up the equation:

$3,420 = $2,999 + finance charge + finance charge

Simplifying this equation, we get:

$421 = 2 x finance charge

finance charge = $210.50

Therefore, the finance charge is $210.50