Shirley, a recent college graduate, excitedly described to her older sister the

$1,900

sofa, table, and chairs she found today. However, when asked, she could not tell her sister which interest calculation method was to be used on her credit-based purchase. Calculate the monthly payments and total cost for a bank loan assuming a one-year repayment period and

15.00

percent interest. Now, assume the store uses the add-on method of interest calculation. Calculate the monthly payment and total cost with a one-year repayment period and

13.00

percent interest. Explain why the bank payment and total cost are lower even though the stated interest rate is higher.

Note: Round intermediate computations to at least five (5) decimal places.

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Part 1

The monthly payment for a bank loan assuming one-year repayment period and

15.00%

interest is

$enter your response here.

(Round to the nearest cent.)

Monthly Installment Loan Tables ( $1,000 loan with interest payments compounded monthly)