Do the Math #1: Monthly Payments and
Finance Charges. Kimberly Jensen and Rebecca Parker
of Mankato, Minnesota, are both single. The pair share an apartment on the
limited resources provided through Kimberly’s disability check from Social
Security and Rebecca’s part-time job at a grocery store. The two grew tired of
their old furniture and went shopping. A local store offered credit at an APR
of 16 percent, with a maximum term of four years. The furniture they wish to
purchase costs $2,800, with no down payment required. Using Table 7-1 or the
Garman/Forgue companion website, make the following calculations:
Do the Math #5: Rule of 78s. Aaron Carson of Hays, Kansas, obtained a two-year
installment loan for $1,500 to buy some furniture eight months ago. The loan
had a 12.6 percent APR and a finance charge of $204.72. His monthly payment is
$71.03. Aaron has made eight monthly payments and now wants to pay off the
remainder of the loan. The lender will use the Rule of 78s method to calculate
a prepayment penalty.
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