Peg Gasperoni bought a $$50,000$ life insurance policy for $$320$ 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 $$80.$ The finance charge

will be added to the unpaid balance. The finance charge is based on an annual percentage rate of $12\%.$

The total The monthly

number of installment The total

If the total

The balance

monthly

before adding finance charge And the total

subject to installments the finance

for all deferred

policy premium And you put finance charge $($ $$30$ minimum$)$

charge will

installments payment price

is:

be:

will be:

will be:

$$320$

down:

will be: will be:

$$80\mathrm{.}00$

$$5\mathrm{.}08$

$$325\mathrm{.}08$

$420$

$$80\mathrm{.}00,$$$240\mathrm{.}00$

$3$

$80\mathrm{.}00$

$428\mathrm{.}10$

$520$

$100\mathrm{.}00125\mathrm{.}00$

Peg feels that the finance charge of $$5\mathrm{.}08$ is in error.

a$.$ What is the actual finance charge for the first three months?

Note: Round your answer to the nearest cent.

Finance Charge

b$.$ Is she correct?

Yes

No