Question

A computer with software costs $2,938, and Catherine Stevens has agreed to pay a

19% per year finance charge on the cash price. If she contracts to pay the loan in 18 months, how much will she pay each month?

Answer 1

Answer: She will pay 209.74056 each month

Explanation:

firstly our cost of computer software = 2938

now the percentage rate of the finance charge per 18 months will be

finance charge rate per 18 months = (rate/12) * 18 = (19/12) * 18 = 28.5% = 0.285

now we find the finance charge

Finance charge = finance charge rate period * cash price

Finance charge = 0.285 * 2938 = 837.33

now we find the installment price

Installment price = finance charge + cash price

Installment price = 837.33 + 2938 = 3775.33

Installment payment = installment payments/number of payment (months)

Installment payment = 3775.44 / 18 = 209.74056

therefore she will pay a sum of 209.74056 each months.