Peg Gasperoni bought a $50,000 life insurance policy for $220 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 $55. 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:
$220	$55.00	$165.00	3	$55.00	$5.27	$225.27
$320	$75.00	$245.00	5	$55.00	$10.42	$330.42
$420	$100.00	$320.00	6	$55.00	$17.38	$437.38

Peg feels that the finance charge of $5.27 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 $

b. Is she correct?

	Yes
	No