Question

You buy items costing $1900 and finance the cost with a fixed installment loan for 24 months at 8% simple interest per year.

Answer 1

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Answer:

1. $304
2. $91.83

Step-by-step explanation:

1. The finance charge is found from the simple interest formula;

  I = Prt

where P is the principal amount, r is the annual rate, and t is the number of years.

24 months is 2 years, so the interest charged is ...

  I = $1900×0.08×2 = $304

The finance charge is $304.

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2. The monthly payment will be the total amount due, divided by the number of months.

  payment = ($1900 +304)/24 = $2204/24 ≈ $91.83

The monthly payment is $91.83.