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.
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
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
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.
To calculate the finance charge of Mary's loan, you need to consider the down payment, the monthly payments, and the total amount paid over the loan term.
First, let's calculate the down payment. The loan requires a 12% down payment on the total purchase amount of $4,200. So the down payment is 12% of $4,200:
Down payment = 0.12 * $4,200 = $504
Next, let's calculate the total amount paid over the loan term. Mary will make 24 equal monthly payments of $195. So the total amount paid over the loan term is 24 * $195:
Total amount paid = 24 * $195 = $4,680
Now, we can calculate the finance charge. The finance charge is the difference between the total amount paid and the initial amount borrowed, which is the total purchase amount minus the down payment:
Finance charge = Total amount paid - (Total purchase amount - Down payment)
Finance charge = $4,680 - ($4,200 - $504)
Finance charge = $4,680 - $3,696
Finance charge = $984
Therefore, Mary's finance charge for her loan would be $984, not $504 as stated in your answer.