Find the amount of interest and the monthly payment for the loan described below. Round interest to the nearest dollar and monthly payment to the nearest cent. Purchased a gas barbeque for $2,150 at 13% add-on interest for 2 years.
A) $\$ 595$ interest; $\$ 114.39$ per month
B) $\$ 559$ interest; $\$ 225.75$ per month
C) $\$ 559$ interest; $\$ 112.88$ per month
D) $\$ 595$ interest; $\$ 112.88$ per month
E) $\$ 559$ interest; $\$ 114.39$ per month

Question

Quizplus · Accepted Answer

Add-on interest means the interest is calculated on the initial amount and then added to that amount before dividing by the number of payments to find the monthly payment. The interest is $2,150 \times 0.13 \times 2 = \$559$. The total amount to be repaid is $2,150 + 559 = \$2,709$. Dividing by 24 months gives a monthly payment of $\$112.88$.

Find the Amount of Interest and the Monthly Payment for the Loan