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Landon's finance charge is $613.2
Landon's monthly payment is; $80.22
How to find the finance charge?
It is convenient to compute the monthly payment first, then figure the total amount repaid and the finance charge.
The amortization formula is:
A = Pr/(1 - (1 + r)⁻ⁿ)
where;
A is the monthly payment
P is the loan amount
r is the monthly interest rate
n is the number of months
b) Using the above formula, we can get the monthly payment as;
A = $4200(0.055/12)/(1 - (1 +0.055/12)⁻⁶⁰) = $19.708333/0.23995049
A = $80.22
The monthly payment amount is $80.22
a) 60 monthly payments add up to;
$80.22 × 60 = $4813.2
Since $4200 of that amount is principal, the finance charge is;
$4813.2 - $4200.00 = $613.2
Landon's finance charge is $613.2
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