Question

cash price is $6,000. a down payment of 10% is required. monthly payments will be $120 a month for 52 months. total installment price: $ amount of finance charge: $ annual percentage rate:

Answer 1

The total installment price is $6,240. The finance charge is $240. The annual percentage rate (APR) is 4%.

Step-by-step explanation:

To calculate the total installment price, we multiply the monthly payment by the number of months: $120 x 52 = $6,240. Since the cash price is $6,000, the total finance charge is the difference between the installment price and the cash price: $6,240 - $6,000 = $240.

To find the annual percentage rate (APR), we need to divide the finance charge by the cash price and multiply by 100: ($240 / $6,000) x 100 = 4%. Therefore, the annual percentage rate is 4%.

Answer 2

The total installment price is $6,240. The finance charge is $840. The annual percentage rate (APR) is approximately 3.76%.

Step-by-step explanation:

To calculate the total installment price, we multiply the monthly payment by the number of months: $120 x 52 = $6,240. The amount financed is the difference between the cash price and the down payment: $6,000 - ($6,000 x 10%) = $5,400. Therefore, the finance charge is the difference between the total installment price and the amount financed: $6,240 - $5,400 = $840.

The annual percentage rate (APR) represents the yearly cost of borrowing and is calculated using the finance charge and the amount financed. To calculate the APR, we use the formula:

APR = (Finance Charge / Amount Financed) x (12 / Number of Months) x 100%

Using the values calculated above, the APR would be:

(840 / 5,400) x (12 / 52) x 100% ≈ 0.163 x 0.231 x 100% ≈ 3.76%