A computer with software costs 2965, and Catherine Stevens has agreed to pay an 18% per year finance charge on the cash price. If she contracts to pay the loan in 18 months, how much will she pay each month?
First determine the cash price of the computer. The cash price of the computer is 2965.
Next find the percentage rate of the finance charge per 18 months.
Rate per 18 months = *18 = *18 = 27%
State the determine equivalent of 27%.
27% = 0.27
Find the finance charge.
Finance charge = finance charge rate period * cash price
= 0.27 *2965
Find the installment price.
Installment price = finance charge + cash price
=800.55 + 2965
Recall the formula.
Installment price = total of installment payments + down payment
In our problem there is no down payment, therefore we can use the formula below.
Total of installment payment = installment price = 3765.55
Finally, divide the total of the installment payments by the number of payments, 18.
Installment payment = total of installment payments/number of payments = = 209.20
So, her monthly payment is 209.20.