document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1199335>Question 1199335</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Jane Windsor financed a $5,900 ski boat with a 12% add-on interest installment loan for 12 months. Given the loan required a 10% down payment, determine the following:<BR>\n" );
document.write( "The amount of the finance charge?\r<BR>\n" );
document.write( "\n" );
document.write( "The amount of the finance charge rebate if the loan were to be paid after the 10th payment?<BR>\n" );
document.write( " </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #833169 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=833169\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> from a mathematical perspective, i would estimate the following:<BR>\n" );
document.write( "the loan is .9 * 5900 = 5310.<BR>\n" );
document.write( "the interest on the loan is .12 * 5310 = 637.2<BR>\n" );
document.write( "this interest charge is divided by 12 to be equal to 53.1 each month<BR>\n" );
document.write( "if the loan is paid off in 10 months, there would be 2 months of interest payments remaining.<BR>\n" );
document.write( "the rebate would therefore be 2 * 53.1 = 106.2.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "note that an add on loan is a simple interest type loan.<BR>\n" );
document.write( "the formula for simple interest type loans is.<BR>\n" );
document.write( "i = p * r * t<BR>\n" );
document.write( "i is the interest<BR>\n" );
document.write( "p is the principal<BR>\n" );
document.write( "r is the interest rate per time period<BR>\n" );
document.write( "t is the number of time periods\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "if the number of time periods are in months, then the annual interest rate is divided by 12.\r<BR>\n" );
document.write( "<BR>\n" );
document.write( "\n" );
document.write( "with the full term of the loan, the formula becomes i = 5310 * .01 * 12 = 637.2<BR>\n" );
document.write( "with the term of the loan equal to 10 months, the formula becomes i = 5310 * .01 * 10 = 531<BR>\n" );
document.write( "the difference is 637.2 minus 531 = 106.2<BR>\n" );
document.write( "that's what would get refunded from a mathematical perspective.<BR>\n" );
document.write( "i have no idea how the banks would handle this.<BR>\n" );
document.write( " </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );