Macon Steinberg purchased a motor scooter with an installment loan that has an APR of 16 percent. The motor scooter sells for $1,687. The store financing requires a 20 percent down payment and 30 monthly payments. What is the finance charge?
A. $300.98
B. $298.30
C. $312.13
D. $325.00

Question

Macon Steinberg purchased a motor scooter with an installment loan that has an APR of 16 percent. The motor scooter sells for $1,687. The store financing requires a 20 percent down payment and 30 monthly payments. What is the finance charge? 
A. $300.98 
B. $298.30 
C. $312.13 
D. $325.00

wolf1728 · Answer

The scooter sells for 1,687.00 You must pay 20% or 337.40 so the amount to be financed is 1,687.00 minus 337.40 which equals 1,349.60 We are to finance $1,349.60 for 30 months at 16% APR interest. The formula for the monthly payment is located here: http://www.1728.org/loanform.htm When you finally figure that out, the monthly payment amounts to: $54.88 If you want to recheck that calculation, use the calculator here: http://www.1728.org/calcloan.htm If we spend $54.88 per month for 30 months the total is $1,646.40 To get the finance charge, we subtract the principal (1,349.60) from the $1,646.40 and get $296.80, the finance charge. The problem is, this is not one of the 4 choices.

anonymous · Answer

Hmm whenever I do this problem I get 312.13 (which is also the answer I have found on another site for this problem). I am not sure though.

wolf1728 · Answer

Hmmm, I'm curious how you got 312.13 and if possible, could you post a link to that other site?