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You plan to purchase items for $4000 and will finance the cost with a fixed installment. The seller tells you that you will have to pay $100 per month for 48 months. (a) how much money will you pay for interest (ie the finance charge) (b) what is the interest percent rate? (c) If this loan is for 48 months, what should T be (in years)? Would you plug that into your equation

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Answer:

800 ; 20% ; 4 years

Step-by-step explanation:

Actual price of item = $4000

Total amount paid in installment = ($100 * 48) = $4800

Finance charge = total amount paid in installment - actual price

Finance charge = $4800 - $4000 = $800

B) Interest percent rate, r :

r% of 4000 = 800

0.01r * 4000 = 800

40r = 800

r = 800/40

r = 20

r = 20%

C.)

Time in years ; for 48 months

T = 48/12 ; T = 4 years