Question

a mountain bike has a cash price of $770. Eric purchases the bike by making a down payment of $23.10 and 24 payments of $43.27. find the finance charge

Answer 1

The finance charge is $291.58

Here, we want to calculate the finance charge

Firstly, we need to calculate the amount the bike will cost if it was an installmental payment

We have this as;

$23.1\text{ + 24(43.27) = \ 1,061.58}$

The finance charge is simply the difference between what the hire purchase offerred and the cash price

Mathematically, we have this as;

$1,061.58-770\text{ = \ 291.58}$