Posted by Anonymous on .
please help me I am not really sure about this please check answer thanks :)
Mary has decided to purchase furniture. She has 2 choices she can pay the full amount of $4,200.The other choice is to finance the furniture for two years with an installment loan. The loan requires a 12% down payment and 24 equal monthly payments of $195 .What would be Mary's finance charge of her loan ?
My answer is $504.00
that doesn't seem right how do you figure it out thanks again :)
Let me ask you this...
How much money is her 12% down payment?
How much is she paying with 24 equal monthly payments of $195?
If you can't answer those, tell me what you are thinking at least so that I can help.
Math for Michael -
ok I got $504 as her down payment I keep messing I am really bad at Math
How do I figure out the last part 24 equal payments of $195 ?
Good job on calculating the down payment.
When we have the word "of," that means the same as "multiplied by."
All we have to do is (24)(195) = 4680
Add that to our down payment.
504 + 4680 = $5184
Math Michael -
ok really dumb question According to the information what would be her finance charge on the loan is it $504
Because the only choice I have to pick from is $504 $984 $ 3,696
Math Michael -
No, it's not a dumb question at all. I wasn't familiar with the term "finance charge," so I assumed it was the total cost of the furniture. Anyway, "a finance charge is any fee representing the cost of credit, or the cost of borrowing."
We are paying $5184 with the loan. Without the loan, it's only $4,200. Our cost of borrowing is the difference.
5184 - 4200 = $984
I learned something, too... finance charge. I'll have to remember that.