SOLUTION: You purchased a laptop computer worth PhP 37,500 by a 30% down payment and agreed to repay the balance in 12 equal monthly payments. There is a 10% simple interest rate on this b

Question 1194969: You purchased a laptop computer worth PhP 37,500 by a 30% down
payment and agreed to repay the balance in 12 equal monthly payments.
There is a 10% simple interest rate on this balance.
Find the finance charge
Find the amount of monthly payments
Estimate the APR
Answer by math_tutor2020(3816) (Show Source): You can put this solution on YOUR website!

L = laptop's value = PhP 37,500
D = down payment
D = 30% of L
D = 0.30*37,500
D = 11,250

P = amount borrowed
P = L - D
P = 37,500 - 11,250
P = 26,250
Or
P = 70% of L
P = 0.70*37,500
P = 26,250

r = 0.10 from the 10% simple interest rate
t = 1 year timespan to repay the loan

Simple Interest:
i = P*r*t
i = 26,250*0.10*1
i = 2,625
This is the finance charge.

A = total amount needed to pay back
A = P(1+rt)
A = 26,250(1+0.10*1)
A = 28,515
Or
A = P + Prt
A = P + i
A = 26,250 + 2,625
A = 28,515

Either way, the amount needed to pay back is PhP 28,515

Divide this total over the 12 months.
(28,515)/12 = 2,376.25
This is the monthly payment.

Because there are 12 equal monthly payments, the repayment period is 1 year. There's a 10% simple interest rate which corresponds directly to the APR.
In other words, the APR is 10%

If the loan repayment window was something else (say 30 days), then the APR would be some other value.
If there were other fees involved, then the APR would be different.

Answers:
Finance Charge = PhP 2,625
Monthly Payment = PhP 2,376.25
APR = 10%

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