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March 29, 2017

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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 :)

  • Math - ,

    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 ?

  • Math - ,

    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.

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