Explanation Given Information: It is given that Layaway plans allow someone, for a fee, to pay for an item over a period of time and then receive the item when he finishes paying for it. In November 2011, Senator Charles E. Schumer of New York warned that the holiday layaway programs recently reinstated by several popular retailers were, when the fees were taken into account, charging interest at a rate significantly higher than the highest credit card rates. Suppose that someone bought a $99 item on October 15 on layaway, with the final payment due on December 15, and that the retailer charged you a $10 service fee. Formula used: The simple interest or an investment (or loan) of PV dollars at an interest rate of i per period for n periods is, I N T = P V r t or, I N T = P V i n Where r is the annual interest rate and t is the time in years. Also i is the interest rate per period and n is the number of periods. Calculation: Consider the provided information, someone bought a $99 item on October 15 on layaway, with the final payment due on December 15, and that the retailer charged you a $10 service fee. So, I N T = 10 . Also, since the item costed us $99. Hence, P V = 99 . Also, since it is bought on October 15 with the final payment due on December 15. Hence, there is a period of 2 months for payment

Finite Mathematics and Applied Calculus (MindTap Course List)

7th Edition

ISBN: 9781337274203

Author: Stefan Waner, Steven Costenoble

Publisher: Cengage Learning

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Chapter 3.1, Problem 36E

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To calculate: The annual simple interest rate paid for the layaway plan, thinking of the fee as interest, if someone bought a $99 item on October 15 on layaway, with the final payment due on December 15, and that the retailer charged someone a $10 service fee.

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Chapter 3.1, Problem 35E

Chapter 3.1, Problem 37E

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The annual simple interest rate paid for the layaway plan, thinking of the fee as interest, if someone bought a $99 item on October 15 on layaway, with the final payment due on December 15, and that the retailer charged someone a $10 service fee.

Solution Summary: The author calculates the annual simple interest rate paid for the layaway plan, thinking of the fee as interest, if someone bought a 99 item on October 15 with the final payment due on December 15.

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To calculate: The annual simple interest rate paid for the layaway plan, thinking of the fee as interest, if someone bought a $99 item on October 15 on layaway, with the final payment due on December 15, and that the retailer charged someone a $10 service fee.

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Chapter 3 Solutions