Marleen purchases a patio set costing \( \$ 2,430 \) by taking out an \( 12.5 \% \) add-on installment loan. The loan requires a \( 20 \% \) down payment and equal monthl payments for 3 years. How much are Mariann's monthly payments? Select one: a. \( \$ 82.67 \) b. \( \$ 74.25 \) c. \( \$ 125.33 \) d. \( \$ 96.49 \)

To find Marleen's monthly payments, we first need to calculate the down payment and the amount to be financed. The down payment is \( 20\% \) of the total cost of the patio set: Down payment = \( 0.20 \times 2,430 = 486 \) Now, subtracting the down payment from the total cost gives us the amount financed: Amount financed = \( 2,430 - 486 = 1,944 \) Since this is an add-on loan with an interest rate of \( 12.5\% \), we calculate the total interest on the amount financed for 3 years: Total interest = \( 1,944 \times 0.125 \times 3 = 726 \) Now, add the total interest to the principal to find the total amount to be paid back: Total amount to be repaid = \( 1,944 + 726 = 2,670 \) Finally, divide the total amount to be paid back by the number of months (36 months) to find the monthly payment: Monthly payment = \( \frac{2,670}{36} \approx 74.25 \) So, the correct answer is b. \( \$ 74.25 \).