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6 April, 02:11

Obtained a $3,200 installment loan for a marble floor in her foyer. The annual percentage rate is 9%. She must repay the loan in 24 months. Find the (a) monthly using the formula, (b) total amount repaid, and (c) the finance charge

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  1. 6 April, 02:35
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    a). The monthly payments = $158.41

    b). Total amount repaid = $3,801.92

    c). The finance charge = $601.92

    Step-by-step explanation:

    Step 1

    The formula for calculating the total amount she will pay is as follows;

    A=P (1+r) ^n

    where;

    A=total amount repaid

    P=principal loan

    r=annual interest rates

    n=number of years

    In our case;

    P=$3,200

    r=9%=9/100=0.09

    n=24/12=2 years

    replacing;

    A=3,200 (1+0.09) ^2

    A=3,200 (1.09) ^2

    A=3,801.92

    a). monthly payments=Amount to be repaid/total number of months

    where;

    Amount to be repaid=3,801.92

    total number of months=24

    replacing;

    monthly payments=3,801.92/24=158.41

    The monthly payments = $158.41

    b). Total amount repaid = $3,801.92

    c). The finance charge=Interest

    The formula for calculating interest is;

    I={P (1+r) ^n}-P

    where;

    P (1+r) ^n = $3,801.92

    P = $3,200

    replacing;

    I = (3,801.92-3,200) = 601.92

    The finance charge = $601.92
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