Question

Landon Wallis is an auto mechanic whowishes to start his own business. He willneed $3900 to purchase tools andequipment. Landon decides to financethe purchase with a 60-month fixedinstallment loan with an APR of 4.5%a. Determine Landons finance charge.b. Determine Landons monthly payment.

Answer 1

QUESTION A

A finance charge is a cost of borrowing money, including interest and other fees. It can be a percentage of the amount borrowed or a flat fee charged by the company.

The table shows the finance charge depending on the parameters. For a 60-month fixed installment loan with an APR of 4.5%, the finance charge per $100 is shown on the table as shown:

Therefore, the charge on $3900 will be:

`\Rightarrow(3900)/(100)*11.86=462.54`

The finance charge is $462.54

QUESTION B

The total payment is simply the sum of the finance charge and the loan amount.

Therefore, the total amount will be:

`\Rightarrow3900+462.54=4362.54`

The monthly payment will simply be the total amount shared over the time period (60 months). Therefore, it is calculated to be:

`\Rightarrow(4362.54)/(60)=72.71`

The monthly payment is $72.71