Question

BECKY KUBIAK WISHES TO PURCHASE NEW APPLICANCES FOR HER HOME. THE

Answer 1

Using the monthly payment formula, it is found that:

• Her monthly payments are of $105.46.

• The total finance charge is of $3,111.04.

What is the monthly payment formula?

It is given by:

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

In which:

• P is the initial amount.

• r is the interest rate.

• n is the number of payments.

Considering that she must pay 20% down, the parameters are given by:

P = 0.8 x 2900 = 2320, r/12 = 0.085/12 = 0.007083, n = 24.

Hence the monthly payments are found as follows:

$A = P\frac{\frac{r}{12}\left(1 + \frac{r}{12}\right)^n}{\left(1 + \frac{r}{12}\right)^n - 1}$

$A = 2320\frac{0.007083(1.007083)^{24}}{(1.007083)^{24} - 1}$

A = $105.46.

The total finance charge is composed by the down payment plus the 24 monthly payments, hence:

F = 0.2 x 2900 + 24 x 105.46 = $3,111.04.

More can be learned about the monthly payment formula at brainly.com/question/26267630

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