Explanation Given Information: The amount of purchase price is $ 1 , 600 , down payment is $ 250 , add-on interest is 10 % and number of payments is 24 . Formula used: Follow the steps to compute the regular monthly payment of an installment loan using add-on interest. Step 1 : The amount financed is computed by subtracting the down payment from purchase price. Amount financed = Purchase price − Down payment Step 2 : Finance charge is computed by multiplying principle with rate and time with the amount financed as the principal. I = P × R × T Where, I is the finance charge, P is the amount financed, R is the rate of interest and T is the time. Step 3 : The total amount of installments payment is computed by adding amount financed and finance charge. Total amount of installment payments = Amount financed+Finance charge Step 4 : The regular monthly payments is computed by dividing the total number of payments by total number of months of the loan. Regular monthly payments = Total number of installment payments Number of months of the loan Calculation: Consider that purchase price is $ 1 , 600 , down payment is $ 250 , add-on interest is 10 % and number of payments is 24 . Compute amount financed by substituting purchase price equals to $ 1 , 600 and down payment to $ 250 , Amount financed = Purchase price − Down payment = $ 1 , 600 − $ 250 = $ 1 , 350 Hence, amount financed is $ 1 , 350

Contemporary Mathematics For Business & Consumers, Brief Edition, Loose-leaf Version

8th Edition

ISBN: 9781305867192

Author: Robert Brechner, Geroge Bergeman

Publisher: South-Western College Pub

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Chapter 13.II, Problem 9RE

To determine

To calculate: The amount financed, the finance charge and the monthly payment for the installment where purchase price is $1,600, down payment is $250, add-on interest is 10% and number of payments is 24.

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Chapter 13 Solutions

Contemporary Mathematics For Business & Consumers, Brief Edition, Loose-leaf Version

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The amount financed, the finance charge and the monthly payment for the installment where purchase price is $ 1 , 600 , down payment is $ 250 , add-on interest is 10 % and number of payments is 24 .

Solution Summary: The author calculates the amount financed, the finance charge, and the monthly payment of an installment loan using add-on interest.

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To calculate: The amount financed, the finance charge and the monthly payment for the installment where purchase price is $1,600, down payment is $250, add-on interest is 10% and number of payments is 24.

Chapter 13 Solutions