Question

Find the difference between the cash price and the payment plan and calculate the interest rate for the following questions.

1. A food processor for $149.50 cash, or $5.00 down and $10.00 per month for 15 months

2. A television for $675.00 cash, or $52.00 down and $120.00 per month for 6 months

3. A smartphone for $150.00 cash, or $25.00 down and $12.00 per month for 11 months

4. Bedroom furniture for $1,985.00 cash, or $400 down and $74.00 per month for 24 months

5. A jacket for $75.00 cash, or $25.00 down and $4.75 per week for 11 weeks

6. The Smiths bought new furniture that cost $3,298.00. The store offered them an option of putting $600 down and making equal payments of $300 a month for 10 months. Use the Federal Reserve System formula to find the APR the Smiths will pay for taking this plan.

Answer 1

Answer:

1).

Difference = $6

Interest rate= 4.03%

2).diffrence = $97

Interest rate = 14.37%

3). Difference = $7

Interest rate= 4.67%

4). difference= 191

Interest rate= 9.6%

5). Difference= 2.25

Interest rate= 3%

6). Difference=$ 302

Interest rate=9.12%

Step-by-step explanation:

1).$10 per months for 15 months

= 10*15=$150

PLus a down payment of $5= $155

Interest = 155-149= $6

Interest rate = 6/149*100= 4.03%

2.)$120.00 per month for 6 months

= 120*6=$ 720

Plus a down payment of $52=$772

Interest= 772-675= $97

Interest rate = 97/675 *100= 14.37%

3). $12.00 per month for 11 months

= 12*11= 132 plus down payment of $25

= $157

Interest= 157-150= $7

Interest rate=7/150 *100= 4.67%

4).$74.00 per month for 24 months

= 74*24=$1776

Plus a down payment of $400=$ 2176

Interest= 2176-1985= 191

Interest rate= 191/1985*100= 9.6%

5).$4.75 per week for 11 weeks

= 4.75*11=$52.25

Plus a down payment if $25

= 25+52.25=$ 77.25

Interest= 77.25-75= 2.25

Interest rate= 2.25/75 *100= 3%

6).$300 a month for 10 months

= 300*10= $3000

Plus a down payment of $600

= $3600

Interest=3600-3298= 302

Interest rate= 302/3298 *100=9.12%