Kevin buys a motorcycle for $8,000. The dealer is charging him an annual interest rate of 9.25% and is using the add-on method to compute monthly payments. If he pays off the loan in 84 months, what are his monthly payments? If he makes a down payment of $2,400, how much will his monthly payments be? Do not round until the final answer. Then, round to the nearest cent.

A: $156.90; $109.83
B: $156.90; $220.13
C: $314.48; $109.83
D: $156.90; $204.41

Question

Kevin buys a motorcycle for $8,000. The dealer is charging him an annual interest rate of 9.25% and is using the add-on method to compute monthly payments. If he pays off the loan in 84 months, what are his monthly payments? If he makes a down payment of $2,400, how much will his monthly payments be? Do not round until the final answer. Then, round to the nearest cent.

A: $156.90; $109.83
B: $156.90; $220.13
C: $314.48; $109.83
D: $156.90; $204.41

anonymous · Answer

I get answer A.

8,000(.0925)(7)=5,180 in interest charges 

So (5,180+8,000)/84= 156.90

(8,000-2,400)(.0925)(7)=3,626

So (8,000-2,400 +3,626)/84= 109.83

anonymous · Answer

Thank you!

anonymous · Answer

were did the 7 come from in the first part