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A cattle rancher needs to construct a new silo in which to store cattle feed. The silo will cost $2000. The rancher pays 15% as a down payment and finances the balance for 60 months at an APR of 7.50% . Determine the rancher's total finance charge and monthly payment.

a) Total finance charge = $368.22; Monthly payment =$34.47

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Answer:

Monthly payment = $34.06

Finance charge = $343.87

Step-by-step explanation:

Given that:

Cost of silo = $2000

Down payment = 15% = (0.15) * 2000 = $300

Loan amount = $2000 - $300 = $1700

Period = 60 months = 5 years

APR = 7.5%

Using then monthly payment calculator, with the satiated parameters inputted :

The monthly payment is $34.06

The total amount paid over 60 months = $2,043.87

Therefore, finance charge = (total amount paid - loan amount)

$2043.87 - $1700

= $343.87

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