The finance charge on a copier was $1,778. The loan for copier was to be paid in 18 monthly payments. Find the finance charge refund if it is paid off in eight months.
What is the finance charge?
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To find the finance charge refund, we need to calculate the amount of finance charge that would be saved by paying off the loan in eight months instead of 18 months.
First, let's find out the monthly finance charge for the copier loan. We can do this by dividing the total finance charge by the total number of payments.
Finance charge per month = Total finance charge / Number of payments
= $1,778 / 18
≈ $98.78 (rounded to two decimal places)
Next, let's calculate the finance charge that would have been paid if the loan continued for eight months.
Total finance charge for eight months = Finance charge per month * Number of payments
= $98.78 * 8
= $790.24 (rounded to two decimal places)
Finally, we can calculate the finance charge refund by subtracting the actual finance charge paid in eight months from the total finance charge (given in the problem).
Finance charge refund = Total finance charge - Finance charge for eight months
= $1,778 - $790.24
= $987.76 (rounded to two decimal places)
Therefore, the finance charge refund for paying off the loan in eight months is approximately $987.76.