2. Sara wants new furniture for her apartment. She picked out furniture that costs $3,500. She has $500 to put down on the furniture, and she can obtain a loan at 8% for 3 years for the remainder. Approximately what will her monthly payment be?
What will be the total cost of the item?
To calculate the total cost of the item, we need to consider the down payment and the loan amount.
The down payment is given as $500.
The cost of the furniture is $3,500.
So, the loan amount will be the difference between the cost of the furniture and the down payment:
Loan amount = $3,500 - $500 = $3,000.
Now, we need to calculate the total cost of the loan over the 3-year period. We can do this using the formula for calculating simple interest:
Total cost of the loan = Loan amount + (Loan amount * Interest rate * Time)
In this case, the interest rate is given as 8% (or 0.08 in decimal form), and the time period is 3 years.
Total cost of the loan = $3,000 + ($3,000 * 0.08 * 3)
= $3,000 + ($720)
= $3,720.
Therefore, the total cost of the furniture, including the loan, will be $3,720.
Now, to calculate the monthly payment, we divide the total cost of the loan by the number of months in the loan period.
Number of months = 3 years * 12 months/year = 36 months.
Monthly payment = Total cost of the loan / Number of months
= $3,720 / 36
≈ $103.33.
Therefore, approximately her monthly payment will be $103.33.
To calculate the total cost of the item, we need to consider the down payment and the loan amount.
1. Down payment: Sara has $500 to put down on the furniture.
2. Loan amount: The total cost of the furniture is $3,500 and Sara is putting down $500, so she will need to borrow $3,500 - $500 = $3,000.
Therefore, the total cost of the item will be the down payment ($500) plus the loan amount ($3,000), which equals $500 + $3,000 = $3,500.