Landon Wallin is an auto mechanic who wishes to start his own business. He will need \( \$ 3800 \) to purchase tools and equipment. Landon decides to finance the purchase with a 48 -month fixed installment loan with an APR of \( 6 \% \). a) Determine Landon's finance charge. b) Determine Landon's monthly payment. Click the icon to view the partial APR table. a) Landon's finance charge is \( \$ 483.74 \). (Round to the nearest cent as needed.) b) Landon's monthly payment is \( \$ \square \). (Round to the nearest cent as needed.)
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The Deep Dive
To determine Landon's monthly payment, we can use the formula for an installment loan, which includes the finance charge. Given that the finance charge is \( \$ 483.74 \), we first need to calculate the total amount borrowed, which includes both the loan amount and the finance charge: Total Loan Amount = Principal + Finance Charge = \( 3800 + 483.74 = 4283.74 \) Next, we can find the monthly payment by dividing the total loan amount by the number of months in the loan term: Monthly Payment = Total Loan Amount / Number of Months = \( 4283.74 / 48 \approx 89.87 \) So, Landon's monthly payment is approximately \( \$ 89.87 \).
