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%."

Peg feels that the finance charge of $5.08 is in error. Check your answer.

The total number of monthly The monthly The total finance And the total If the total The balance installments installment before charge for all deferred policy And you subject to finance ($30 minimum) adding the finance installments payment price premium is: put down: charge will be: will be: charge will be: will be: will be: $320 $80.00 $240.00 3 $420 $100.00 $320.00 OF A $80.00 $5.08 $325.08 $80.00 $8.10 $428.10 $520 $125.00 $395.00 $80.00 $12.17 $532.17