Question

You purchase a computer for $1999.99 plus 7% sales tax. The1 pointelectronics store offers an instafment loan that allows you to pay for thecomputer by making 12 equal monthly payments of $203.30. What is thecost of credit, in dollars, for this loan? Round your answer to the nearestcent.Cost of credit = Total amount due - Loan proceeds

Answer 1

Since the cost of the computer is $1999.99 plus 7% tax, then

The total cost of the computer is

$\begin{gathered} C=1999.99+1999.99\times\frac{7}{100} \\ C=2139.9893 \end{gathered}$

Since each installment loan is $203.30 for 12 months, then

The total amount of the loan is

$\begin{gathered} T\mathrm{}L=203.30\times12 \\ T\mathrm{}L=2439.60 \end{gathered}$

The cost of the credit is the difference between them

$\begin{gathered} C\mathrm{}C=2439.60-2139.9893 \\ C\mathrm{}C=299.6107 \end{gathered}$

The cost of the credit is $299.61 to the nearest cent