Question

Freda Frederick purchased furniture with an installment loan that has an APR of 8%. The furniture sells for $3,000. The store financing requires a 10% down payment and 18 monthly payments. What is the monthly payment?

Answer 1

The monthly payment is $158.90.

Explanation:

The furniture sells for $3,000.

The store financing requires a 10% down payment.

The down payment is =
`0.10*3000=300` dollars

Now the balance remains =
`3000-300=2700` dollars

We will add 8% in the balance for the APR, that is 5.91% as given in the table.

`0.0591*2700=159.57`

So, the balance becomes =
`2700+159.57=2859.57` dollars

As the store needs 18 monthly payments, so per month payment is =

`(2859.57)/(18)=158.865` or $158.90

Therefore, the answer is $158.90.

Answer 2

The furniture sells for the price of $3000.
Downpayment should be 10%, we have:
Balance = $3000 - (3000*10%)
Balance = $2700
Plus 8% in the balance for the APR, we have:
New Balance = 2700 + (2700*5.91%)
New Balance = $2,859.57
Divided by 18 months, we have:
Monthly payment = $2,859.5718
Monthly payment = $158.87

The monthly payment is $158.87.