Question

zoom please

Peg Gasperoni bought a $50,000 life insurance policy for $340 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 $85. The finance charge will be added to the unpaid balance. The finance charge is based on an annual percentage rate of 18%." The total number of monthly The monthly If the total The balance installments installment before policy And you subject to finance ($30 minimum) adding the finance premium is: put down charge will be: charge will be $340 $85.00 $255.00 $85.00 $440 $105.00 $335.00 $85.00 $540 $130.00 $410.00 $85.00 The total finance charge for all installments will be $8.03 $12.81 $18.84 And the total deferred payment price will be: $348.03 $452.81 $558.84 Peg feels that the finance charge of $8.03 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 C b. Is she correct? Yes Ο Νο

Answer 1

1 A B C D E 1 a) 2 Policy premium Monthly installment Total balance Interest rate Finance charge 340 85 255 1.50% 3.83 4 1.50% 2.61 174 82 92 1.50% 1.37) 6 Actual Finance Charge 3 255/ 81 174 5 7.81

ДА В C D E 1 a) 2 Policy premium Monthly installment Total balance Interest rate Finance charge 3 340 85 =A3-B3 =18%/12 =C3*D3 4 =C3 =85-E3 =A4-B4 =18%/12 =C4*D4 5 174 =B3-E4 =A5-B5 =18%/12 =C5*D5 6 Actual Finance Charge =E3+E4+E5

b)

Yes. She is correct because the actual finance charge is $7.81 whereas the finance charge of $8.03 is error.