Question

Tim Worker decided to purchase a new DVD player on an installment loan. The DVD player was $365.00. Tim agreed to pay $36.00 per month for 12 months. What is the finance charge in dollars?

Answer 1

Lets solve for the finance charge in dollars when Tim agreed to pay $36 for 12 months. We formulate an equation by enumerating the following:
1.) Total amount that Tim paid for the DVD player is $36 times 12 months is equal to $432.
2.) Total amount paid is the summation of DVD player original price plus the result of multiplication of finance percent charge and original price.
Equation is $365+($365x%charge)=$432.
Solve for % charge,
%charge = ($432-$365)/$365
%charge =0.1834 or 18.4%
Therefore, the finance charge in dollar is $67.