Karen and Wayne need to buy a refrigerator because theirs just broke. Unfortunately, their savings account is depleted, and they will need to borrow money in order to buy a new one. Sears offers them an installment loan at 16% (add-on rate). If the refrigerator at Sears costs $1,598 plus 5% sales tax, and Karen and Wayne plan to pay for the refrigerator for 3 years, what is the monthly payment?
I got $53.14 but it was wrong
1598 * 1.05 = 1,677.90 total price
I = 1677.9 * 0.16 * 3
I = 805.39
(1,677.9 + 805.39) / 36 = 68.98 monthly payment
To calculate the monthly payment for an installment loan with an add-on interest rate, we can use the formula:
Monthly Payment = (Loan Amount + Interest) / Number of Months.
First, let's calculate the total cost including sales tax:
Cost of refrigerator = $1,598
Sales tax = 5% of $1,598 = $79.90
Total cost = Cost of refrigerator + Sales tax = $1,598 + $79.90 = $1,677.90
Next, let's calculate the interest:
Loan amount = Total cost = $1,677.90
Interest rate = 16% (add-on rate)
Interest = Loan amount * Interest rate = $1,677.90 * 0.16 = $268.46
Now, we can calculate the monthly payment:
Number of months = 3 years * 12 months/year = 36 months
Monthly payment = (Loan amount + Interest) / Number of months
= ($1,677.90 + $268.46) / 36
= $1,946.36 / 36
≈ $54.06 (rounded to the nearest cent)
Therefore, the monthly payment for Karen and Wayne's loan to buy the refrigerator is approximately $54.06.
To calculate the monthly payment, we need to consider the total cost of the refrigerator including sales tax and the interest rate for the loan.
First, let's calculate the total cost of the refrigerator, including the sales tax. The refrigerator costs $1,598, and the sales tax is 5% of the cost, which can be calculated as:
Sales tax = (5/100) * $1,598
Next, we need to calculate the total amount borrowed, which is the sum of the cost of the refrigerator and the sales tax:
Total borrowed amount = $1,598 + Sales tax
Now we can calculate the interest on the loan. The interest rate is 16% per year (add-on rate). Since the loan term is 3 years, we can calculate the interest as:
Interest = (16/100) * Total borrowed amount * Loan term
The total amount to be repaid, including both the principal borrowed and the interest, is:
Total amount to be repaid = Total borrowed amount + Interest
Finally, we can calculate the monthly payment by dividing the total amount to be repaid by the total number of months in the loan term (3 years or 36 months):
Monthly payment = Total amount to be repaid / Loan term in months
Let's plug in the values and calculate the monthly payment.
Sales tax = (5/100) * $1,598 = $79.90
Total borrowed amount = $1,598 + $79.90 = $1,677.90
Interest = (16/100) * $1,677.90 * 3 = $804.90
Total amount to be repaid = $1,677.90 + $804.90 = $2,482.80
Monthly payment = $2,482.80 / 36 months ≈ $68.97
Therefore, the monthly payment for Karen and Wayne's refrigerator loan is approximately $68.97.
$1598 *5% =$79.90
$1598 + $79.90 = $1677.90
$1677.90 * 15% = $251.69
$1929.59 / 36 = $53.60