A mountain bike has a cash price of $690.00. Eric purchases the bike by making a down payment of $69.00 and 24 payments of $38.74. Find the finance charge.

Question

Quizplus · Accepted Answer

The total amount paid by Eric is:

Down payment + 24 monthly payments
$69 + (24 x $38.74) = $996.76

To find the finance charge, we need to subtract the cash price of the mountain bike from the total amount paid by Eric:

Total amount paid - Cash price
$996.76 - $690 = $306.76

However, we need to remember that Eric did not pay the full finance charge upfront. Instead, he paid it in smaller amounts over 24 months. This means that the finance charge includes not only the interest, but also any fees or charges associated with the financing. To find the finance charge per month, we can divide the total finance charge by the number of months of the loan:

Finance charge per month = Total finance charge / Number of months
$306.76 / 24 = $12.78

Therefore, the finance charge is $12.78 per month or $308.76 for the entire loan period. The closest answer choice to this amount is D ($308.76).

A Mountain Bike Has a Cash Price of $690