chap 14-9-10

Jill bought a $640 rocking chair. The terms of her revolving charge are 2% on the unpaid balance from the previous month. If she pays $100 per month, complete a schedule for the first 3 months like Table 14.3. Be sure to use the U.S. Rule. (Round your final answers to the nearest cent.)

Monthly payment number

Outstanding balance due

2% interest payment

Amount of monthly payment

Reduction in balance due

Outstanding balance due

1

$

$

$

$

$

2

$

$

$

$

$

3

$

$

$

$

$

Peg Gasperoni bought a $50,000 life insurance policy for $160 per year. Ryan Life Insurance Company sent her the following billing instructions along with a premium plan example:

"Your insurance premium notice will be mailed to you in a few days. You may pay the entire premium in full without a finance charge or you may pay the premium in installments after a down payment and the balance in monthly installments of $40. The finance charge will be added to the unpaid balance. The finance charge is based on an annual percentage rate of 18%."

If the total policy premium is:	And you put down:	The balance subject to finance charge will be:	The total number of monthly installments ($30 minimum) will be:	The monthly installment before adding the finance charge will be:	The total finance charge for all installments will be:	And the total deferred payment price will be:
$160	$40.00	$120.00	3	$40.00	$3.90	$163.90
$260	$60.00	$200.00	5	$40.00	$9.23	$269.23
$360	$85.00	$275.00	7	$40.00	$17.39	$377.39

Peg feels that the finance charge of $3.90 is in error. Check your answer.

a. What is the actual finance charge for the first three months? (Round your answer to the nearest cent.)

Finance Charge $

TABLE 14.3 Schedule of payments Monthly payment number Outstanding balance due Amount of monthly payment $500.00 11% interest payment 120.00 (015 $8,000.00) $114.30 015 $7,620.00) Reduction in balance due $380.00 ($500.00 $120.00) $385.70 ($500.00 1 14.30) $391.49 ($500.00 $108.51) Outstanding balance due $8,000.00 $7,620.00 ($8,000.00 $380.00) $7,234.30 ($7,620.00 $385.70) $6,842.81 ($7,234.30 $391.49) $7,620.00 $500.00 $7,234.30 $108.5 015 x $7,234.30) $500.00