Question

Shania bought a 1972 drum set on the installment plan. The installment plan agreement included 20% down payment and 36 monthly payments of $52.04 each. What is the finance charge

Answer 1

Answer-

The finance charge is $295.84

Solution-

We know that,

$\text{Finance charge}=\text{Total amount paid}-\text{Original cost}$

As the original cost of the drum is = $1972

She paid 20% as down payment. So the amount of down payment is,

$=1972\times \dfrac{20}{100}=\ 394.40$

She has to pay 36 monthly payments of $52.04 each. So the amount to be paid is,

$=36\times 52.04=\ 1873.44$

So the total amount paid will be,

$=1873.44+394.40=\ 2267.84$

Therefore, the finance charge is $2267.84-1972=\ 295.84$