Monthly Payments and Finance Charges
Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 percent, with a maximum term of four years. The furniture she wishes to purchase costs $4,900, with no down payment required. Using Table 7-2 or the Garman/Forgue companion website, make the following calculations (round all intermediate calculations to two decimal places):
What is the amount of the monthly payment if she borrowed for four years? Round your answer to the nearest cent. Use rounded answer for later calculations.
$
What are the total finance charges over that four-year period? Round your answer to the nearest dollar.
$
How would the payment change if Kimberly reduced the loan term to three years? Round your answer to the nearest cent.
A(n) increase/decrease of $ compared to the 4-year loan.
What are the total finance charges over that three-year period? Round your answer to the nearest dollar.
$
How would the payment change if she could afford a down payment of $600 with four years of financing? Round your answer to the nearest cent.
A(n) increase/decrease of $ compared to the $4,900, 4-year loan.
What are the total finance charges over that four-year period given the $600 down payment? Round your answer to the nearest dollar.
$