Macon Steinberg purchased a motor scooter with an installment loan that has an APR of 16
percent. The motor scooter sells for $1,687. The store financing requires a 20 percent down payment and 30 monthly payments. What is the finance charge?
Assuming the rate is 16% per annum compounded monthly, let the
monthly payment be P
i = .16/12 = .01333...
PV = .80(1687) = 1349.60
P( 1 - 1.01333...^-30)/.013333... = 1349.60
p = $ 54.88
total paid: 30(54.88) + .2(1687) = 1983.73
take if from here