The amount of finance charges for the loan amount of $6,500 is $17.15
The finance charge is the extra amount for holding the loan amount until the maturity period. It is mostly the interest amount paid on the entire loan amount.
Computation:
Given,
[tex]P[/tex] Principal Amount =$6,500
[tex]i[/tex] Interest rate =9.5%
[tex]n[/tex] Period of compounding =36 months
First, the annuity formula will be used to determine the entire future value:
[tex]\begin{aligned}A&=P\times(1+\frac{i}{n})\\&=\$6,500\times(1+\frac{0.095}{36})\\&=\$6,517.15\end{aligned}[/tex]
Now, the finance charge will be determined by the difference between the Annuity amount and Principal amount.
[tex]\begin{aligned}\text{Finance Charge}&=A-P\\&=\$6,517.15-\$6,500\\&=\$17.15\end{aligned}[/tex]
Therefore, the finance charge is $17.15 is not mentioned in any of the given options.
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