Question
Peg Gasperoni bought a $50,000 life insurance policy for $180 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 $180 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 $45. The finance charge will be added to the unpaid balance. The finance charge is based on an annual percentage rate of 15%."
| 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: |
|---|---|---|---|---|---|---|
| $180 | $45.00 | $135.00 | 3 | $45.00 | $3.66 | $183.66 |
| 280 | 65.00 | 215.00 | 5 | 45.00 | 7.94 | 287.94 |
| 380 | 90.00 | 290.00 | 7 | 45.00 | 14.39 | 394.39 |
Peg feels that the finance charge of $3.66 is in error.
What is the actual finance charge for the first three months?
Note: Round your answer to the nearest cent.
Finance Charge: $
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Cengage Learnings Online General Ledger For Heintz/parrys College Accounting, 2, 2 Terms (12 Months)
Authors: James A. Heintz, Robert W. Parry
22nd Edition
1305669991, 9781305669994
