MAT 142 Problem set

Unit: Finance

Topic: Consumer Loans

Directions: Solve the following problems. Please show your work, show the correct formula and explain your reasoning.

1. Hector and Yolanda buy a plasma TV from Sparkys Electronics on an installment plan (simple interest add on loan). They will pay the TV off in 3 years, paying % interest.
a. If the TV cost $, what will their monthly payments be?
b. If they make an $800 down payment up front, what will their monthly payments be?

2. The table below shows the activity on Zuliemias credit card for the month of August. She

started the month with a balance of $, and her credit card charges 18.5% interest. Use

the Average Daily Balance method to calculate her finance charges for the month of August.