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Sagot :
Using simple interest, it is found that:
- The total amount paid was of $7,084.8.
- The finance charge was of $584.8.
- The simple interest rate was of 3%.
Simple Interest
Simple interest is used when there is a single compounding per time period.
The amount of interest after t years in is modeled by:
[tex]I = Prt[/tex]
In which:
- P is the initial amount.
- r is the interest rate, as a decimal.
In this problem, the amount paid was of 36 monthly payments of
$196.80, hence:
36 x 196.80 = $7084.8.
The total amount paid was of $7,084.8.
The original price is of $6,500, hence the finance charge was of:
7084.8 - 6500 = $584.8.
For interest, we have that:
[tex]I = 584.8, P = 6500, t = 3[/tex], hence:
[tex]I = Prt[/tex]
[tex]584.8 = 6500(3)r[/tex]
[tex]r = \frac{584.8}{6500 \times 3}[/tex]
[tex]r = 0.03[/tex]
The simple interest rate was of 3%.
More can be learned about simple interest at https://brainly.com/question/25296782
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