You buy items costing $900 and finance the cost with a simple interest fixed installment loan at 5% simple interest per year. The finance charge is $112.50. a. How many years will you be paying? b. What is your monthly payment?
Problem Set 1 Part 2
These problems focus on simple interest (section 7-3 in the etext) and fixed installment loans (section 7-5 in the text).
Pay particular attention to examples 1-7 in section 7-3 and examples 1 and 2 in section 7-5.
Only do the one question that corresponds to your assigned number. Do not answer all of the questions.
Be sure that you show all of your work to reach your answer. Each step must be on a separate line. Your method to reach your answer must be clear and include explanations.
Only round when you have reached a final answer. Do not round during the steps to reach the final answer. Use the longer number that your calculator gives you.
Final answers
Round money to the nearest cents.
Example $46.778 rounds to $46.78
Round answers with decimals to the nearest hundredth.
Example: 876.4567 rounds to 876.46
Example: 34.321 rounds to 34.32
Exercise
You buy items costing $900 and finance the cost with a simple interest fixed installment loan at 5% simple interest per year. The finance charge is $112.50.
a. How many years will you be paying?
b. What is your monthly payment?
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