Question

What is the total finance charge for a $4,250 loan at 13.25% interest compounded monthly for 24 months?

Answer 1

The answer to this question is C. $611.20 hope this helps :)

Answer 2

Answer: Option c. $ 611.20 will be correct.

Explanation:

Since, the total amount of finance charge is $A=P\frac{r(1+r)^n}{(1+r)^n-1}$

Where P is the principle, r is the rate, n is the times of compound interest (monthly or quarterly etc.) .

Here P=$4250 r=13.25%, and n=24.

So according to the formula So, the finance charge= $4250\frac{13.25(1+13.25)^{24}}{(1+13.25)^{24}-1}$ =  $ 611.20