Question

Harry Dixon is purchasing a new refrigerator with an installment loan that has an APR of 18%. The refrigerator sells for $989.99. He agrees to make a 20% down payment and 12 monthly payments. What is the finance charge?

Answer 1

To calculate the finance charge, subtract the down payment from the total price of the refrigerator. Then, calculate the monthly interest rate using the APR. Finally, multiply the monthly interest rate by the amount financed to find the finance charge. The finance charge is $11.89488.

Step-by-step explanation:

To calculate the finance charge, we first need to calculate the amount financed. The refrigerator sells for $989.99 and Harry makes a 20% down payment, which is 0.20 * $989.99 = $197.998. The amount financed is the remaining amount, which is $989.99 - $197.998 = $792.992.

Next, we need to calculate the interest on the loan. The APR is 18% and the loan has 12 monthly payments, so the monthly interest rate is 18% / 12 = 1.5%. The interest on the loan is 1.5% * $792.992 = $11.89488.

Therefore, the finance charge is $11.89488.

Answer 2

1.- Made an initial payment of $ 49.95.

2.- And I pay 12 monthly installments, each of $ 78.34

Step-by-step explanation:

He 20% of 989.99 is: 49.95

And 989.99 minus 49.95 is: 940.04

Finally 940.04 divided by 12 is: 78.34