Chelsea made monthly payments for four years before her $13,440 loan was paid off. The loan had an interest rate of 5.86%, compounded monthly. Chelsea paid $156.60 in service charges. To the nearest tenth, what percentage of the total cost of the loan did her finance charges comprise? Round all dollar values to the nearest cent.

Question

Mathematics

Byron

21 November, 19:39

Chelsea made monthly payments for four years before her $13,440 loan was paid off. The loan had an interest rate of 5.86%, compounded monthly. Chelsea paid $156.60 in service charges. To the nearest tenth, what percentage of the total cost of the loan did her finance charges comprise? Round all dollar values to the nearest cent.

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Tiara · Answer 1

Given:

PV = 13,440

i = 5.86%, compounded monthly

t = 4 years

13,440 (0.0586/12)) / (1 - (1+0.0586/12) ^-48 = 15,109.44

15,109.44 + 156.60 = 15,266.04

15,266.04 - 13,440.00 = 1,826.04

1,826.04/15,266.04 = 11.96 % Percentage total of Finance Charge of the total loa