01.09.2021

Landon Wallin is an auto mechanic who wishes to start his own business. He will need ​$ to purchase tools and equipment. Landon decides to finance the purchase with a ​-month fixed installment loan with an APR of ​%.
​a) Determine​ Landon's finance charge.
​b) Determine​ Landon's monthly payment.

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21.11.2022, solved by verified expert
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Answer:

a) $316.05
b) $134.0

Step-by-step explanation:

A) Total Loan = $ 4,500 

Period = 36 Months 

Rate = 4.5% 

Finance charges rate for 36 months at the rate of 4.5% = 7.09 per $100 

total finance charge = (7.09/100)4500 =  $319.05

B) 

monthly payment = P x R x (1+R)^N / [(1+R)^N-1] = 4500 x (4.5/12/100) x (1+4.5/12/100)^36 / [(1+4.5/12/100)^36-1]

= 4000x(0.375/100)x(1.375/100)^36 / ((1.375/100)^36 - 1) = $134.0

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