10.4 Installment Buying 617 Table 10.2 Annual Percentage Rate Table for Monthly Payment Plans Number of payments Annual Percentage Rate 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% (Finance charge per $100 of amount financed) 6 1.1699 1.3166 1.4634 1.6103 1.7573 1.9044 2.0516 2.1989 2.3463 2.4937 2.6413 2.7890 2.9368 12 2.1799 2.4542 2.7290 3.0041 3.2797 3.5557 3.8321 4.1089 4.3861 4.6637 4.9418 5.2202 5.4991 18 3.1965 3.6003 4.0050 4.4106 4.8171 5.2246 5.6330 6.0423 6.4525 6.8637 7.2758 7.6888 8.1027 24 4.2198 4.7547 5.2913 5.8296 6.3695 6.9110 7.4542 7.9990 8.5455 9.0936 9.6434 10.1948 10.7478 30 5.2498 5.9176 6.5881 7.2611 7.9368 8.6150 9.2957 9.9791 10.6650 11.3534 12.0445 12.7381 13.4342 36 6.2863 7.0889 7.8952 8.7052 9.5190 10.3364 11.1575 11.9824 12.8109 13.6431 14.4790 15.3186 16.1619 48 8.3795 9.4567 10.5406 11.6311 12.7281 13.8318 14.9420 16.0587 17.1820 18.3119 19.4482 20.5911 21.7404 60 10.4991 11.8581 13.2274 14.6070 15.9968 17.3969 18.8072 20.2277 21.6584 23.0992 24.5501 26.0112 27.4823 Example 2 Window Blinds Kristin wishes to purchase new window blinds for her house at a cost of $1500. The home improvement store has an advertised finance option of no down payment and 6% APR for 24 months. a) Determine the finance charge. b) Determine Kristin’s monthly payment. Solution a) Table 10.2 gives the finance charge per $100 of the amount financed. The table shows that the finance charge per $100 for 24 months at 6% is $6.3695 (circled in red). Because Kristin is financing $1500, the number of hundreds of dollars financed is 15. 1500 100 = To determine the total finance charge, multiply the finance charge per $100 by the number of hundreds of dollars financed. Total finance charge $6.3695 15 $95.54 = × ≈ Therefore, Kristin will pay a total finance charge of $95.54. b) To determine the monthly payments, first calculate the total installment price by adding the finance charge to the purchase price. Total installment price $1500 $95.54 $1595.54 = + = Next divide the total installment price by the number of payments. Monthly payment $1595.54 24 $66.48 = ≈ Kristin will have 24 monthly payments of $66.48. 7 Now try Exercise 11 Instead of using Table 10.2, we can use the following installment payment formula to directly calculate the installment payment. Installment Payment Formula m p r n r n 1 1 n t ( ) = ⎛ ⎝ ⎞ ⎠ − ⎛ + ⎝ ⎞ ⎠ − ⋅ In the formula, m is the installment payment, p is the amount financed, r is the annual percentage rate as a decimal number, n is the number of payments per year, and t is the time in years.
RkJQdWJsaXNoZXIy NjM5ODQ=