Question
Peg Gasperoni bought a $50,000 life insurance policy for $140 per year. Ryan Life Insurance Company sent her the following billing instructions along with a
Peg Gasperoni bought a $50,000 life insurance policy for $140 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 $36. The finance charge will be added to the unpaid balance. The finance charge is based on an annual percentage rate of 12%."
| 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: |
| $140 | $36.00 | $104.00 | 3 | $36.00 | $2.29 | $142.29 |
| 240 | 56.00 | 184.00 | 6 | 36.00 | 5.61 | 245.61 |
| 340 | 81.00 | 259.00 | 8 | 36.00 | 11.28 | 351.28 |
Peg feels that the finance charge of $2.29 is in error. a. What is the actual finance charge for the first three months? (Round your answer to the nearest cent.)
b. Is she correct?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Adventure Capitalist The Ultimate Road Trip
Authors: Jim Rogers
1st Edition
0375509127, 978-0375509124
