Solution
A=PĆ(1+rt)
Where:
A = Total amount
P = principal amount = $400
r = interest rate = 6 % =6/100 = 0.06
t = time period = x
Finance charge = $48
we will first divide the interest rate by 12 to find the monthly interest rate.
[tex]\begin{gathered} A=P+I \\ A=400+48 \\ A=448 \end{gathered}[/tex]To find the number of years of paying
[tex]\begin{gathered} I=P\times rt \\ 48=400\times0.06t \\ 48=400\times0.06t \\ 48=24t \\ t=\frac{48}{24} \\ t=2 \\ t=2\text{years} \end{gathered}[/tex]Time = 2 years
2 years = 2 x 12 = 24 month
(b) Now to find the monthly payment, we will simply divide the total amount payable by number of months.
Monthly payment
[tex]\begin{gathered} A=P+I \\ A=400+48 \\ A=448 \end{gathered}[/tex]Monthly payment =
[tex]\frac{448}{2(12)}=18.67[/tex]Therefore the monthly payment = $19
