Peg Gasperoni bought a $50,000 life insurance policy for $310 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 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:
$310	$80.00	$230.00	3	$80.00	$7.11	$317.11
$410	$100.00	$310.00	4	$80.00	$11.64	$421.64
$510	$125.00	$385.00	5	$80.00	$17.67	$527.67

Peg feels that the finance charge of $7.11 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