Business Mathematics Brief 12th Edition by Stanley Salzman ,Gary Clendenen, Charles Miller

Exercise 16

Find the finance charge (FC) and the total installment cost (TIC) for the following. (See Example.)
Finding the Total Installment Cost
Frank Kimlicko recently received his master's degree and began work at a large community college as a music professor specializing in classical guitar. He purchased an exquisite-sounding classical guitar costing $3800 with $500 down and 36 monthly payments of $109.61 each. Find (a) the total installment cost, (b) the finance charge, and (c) the amount financed.
Quick TIP
To find the total installment cost, add the down payment to the sum of all monthly payments.
SOLUTION
(a) The total installment cost is the down payment plus the total of all monthly payments.
Total installment cost = $500 + 1$109.61 × 362 = $4445.96
(b) The finance charge is the total installment cost less the cash price.
Finance charge = $4445.96 ? $ 3800 = $645.96
(c) The amount financed is $3800 ? $500 = $3300.