Grandin wishes to take out an installment loan to finance the purchase of a small antique dining set costing $71,500. Her loan requires a 22.5% down payment and equal payments of $2,557 for 40 months. What is the amount of the finance charge on this loan?

Question

Quizplus · Accepted Answer

The correct answer is A. The amount of the finance charge on this loan is $46,867.50. This is calculated by subtracting the down payment from the total cost of the loan, and then multiplying the result by the finance charge percentage. In this case, the down payment is $71,500 x 0.225 = $16,062.50, and the finance charge percentage is 22.5%. So, the finance charge is ($71,500 - $16,062.50) x 0.225 = $46,867.50.

Grandin Wishes to Take Out an Installment Loan to Finance