Explanation Given Information: Erica Larsen purchased a living room for $ 4 , 500 , paid down payment is $ 500 , payment per month $ 190 and time period for loan is 24 months. Formula used: Follow the steps to compute the annual percentage rate using the APR table Step 1 : The formula for finance charge per $ 100 can be computed: Finance charge per $100 = Finance charge × 100 Amount financed Step 2 : From table 13-1, note the number of payment column to the number of payments for the loan. Step 3 : Note the right number of payment row to the table factor that is closely related to the finance charge per $ 100 Total amount of installment payments = Amount financed + finance charge Step 4 : Look at the top of the column for the APR of the loan. Calculation: Consider that amount of purchase price is $ 4 , 500 , paid down payment is $ 500 and payment per month $ 190 and time period for loan is 24 months. Compute amount financed by substituting purchase price to $ 4 , 500 and down payment to $ 500 , Amount financed = Purchase price − Down payment = 4 , 500 − 500 = $ 4 , 000 Hence, the amount financed is $ 4 , 000 . Compute the total payments by substituting payment per month $ 190 and time period for loan is 24 months

Contemporary Mathematics for Business and Consumers

7th Edition

ISBN: 9781285189758

Author: Robert Brechner, George Bergeman

Publisher: Cengage Learning

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Chapter 13.II, Problem 6TIE

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To calculate: The annual percentage rate if Erica Larsen purchased a living room for $4,500, paid down payment is $500, payment per month $190 and time period for loan is 24 months.

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Chapter 13.II, Problem 5TIE

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Chapter 13 Solutions

Contemporary Mathematics for Business and Consumers

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The annual percentage rate if Erica Larsen purchased a living room for $ 4 , 500 , paid down payment is $ 500 , payment per month $ 190 and time period for loan is 24 months.

Solution Summary: The author calculates the annual percentage rate (APR) that Erica Larsen is paying on the loan.

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To calculate: The annual percentage rate if Erica Larsen purchased a living room for $4,500, paid down payment is $500, payment per month $190 and time period for loan is 24 months.

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Chapter 13 Solutions