Tamora just made the last of her monthly payments on her loan. She had been making these payments for the past nine years. The l
oan had a principal of $10,675 and an interest rate of 4.75%, compounded monthly. In addition, Tamora paid $939.25 in service charges. What was Tamora’s total finance charge? Round all dollar values to the nearest cent. a.
$939.25
b.
$11,614.25
c.
$3,403.53
d.
$2,464.28
Detailed Solution: <span>principal was 10,675 interest rate was 4.75% per year compounded annually. additional $939.25 was paid in service charges. payment on the principal plus interest is shown below:
pv = 10675 i = .0475/12 = .0039583333... per month. n = 9 * 12 = 108 months. fv = 0 pmt = 121.6635... per month total finance charge would be (108 * 121.6635... + 939.25 - 10675). that equals to 13139.66 + 939.25 - 10675 = 3403.91 </span>