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10 November, 10:50

Michaels plumbing purchased a used van for $3,250. the company made a down payment of $450 and agrees to 24 payments of $150 per month. find the finance charge.

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  1. 10 November, 10:55
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    Finance charge can be defined as the amount charged by a creditor to a debtor as borrowing fees or by a seller to a buyer for allowing the buyer to extend the payment period for a certain good/service. In this case, the original price of the car was $3,250. But since Michael's Plumbing was not able to pay the full amount at once, they made a down payment of $450 and later 24 equal installments of $150. In total, the amount paid will be (450 + (150*24)) = $4,050. The finance charge is what they will pay over and above the initial cash price. This is arrived at by getting the difference as follows $4,050-$3,250 = $800
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