document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1204235>Question 1204235</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Karen and Wayne need to buy a refrigerator because theirs just broke. Unfortunately,their savings account is depleted, and they will need to borrow money in order to buy a new one. Sears offers them an installment loan at 15% (add-on rate). If the refrigerator at Sears costs $1,500 plus 5% sales tax, and Karen and Wayne plan to pay for the refrigerator for 2 years, what is the monthly payment?\r<BR>\n" );
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document.write( "$81.25\r<BR>\n" );
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document.write( "$93.84\r<BR>\n" );
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document.write( "$76.78\r<BR>\n" );
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document.write( "$72.34\r<BR>\n" );
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document.write( "$85.31 </SPAN>\n" );
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document.write( "Answer: <font color=red size=4>$85.31</font>\r<BR>\n" );
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document.write( "Explanation\r<BR>\n" );
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document.write( "The fridge starts off at $1500<BR>\n" );
document.write( "But then increases to 1500*1.05 = $1575 when adding on the sales tax.\r<BR>\n" );
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document.write( "P = loan amount = 1575<BR>\n" );
document.write( "r = 0.15 = add on rate<BR>\n" );
document.write( "t = 2 = number of years<BR>\n" );
document.write( "A = total amount to pay back<BR>\n" );
document.write( "A = P*(1+r*t)<BR>\n" );
document.write( "A = 1575*(1+0.15*2)<BR>\n" );
document.write( "A = 2047.50<BR>\n" );
document.write( "Karen and Wayne must pay back $2047.50 in total.\r<BR>\n" );
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document.write( "Spread that total over 24 equal payments.<BR>\n" );
document.write( "2047.50/24 = 85.3125 = <font color=red size=4>$85.31</font> is the monthly payment.\r<BR>\n" );
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document.write( "Further Reading<BR>\n" );
document.write( "<a  rel=nofollow HREF= \"https://www.finder.com/add-on-interest\">https://www.finder.com/add-on-interest</a> <BR>\n" );
document.write( "and<BR>\n" );
document.write( "<a  rel=nofollow HREF= \"https://www.investopedia.com/terms/a/add-on_interest.asp\">https://www.investopedia.com/terms/a/add-on_interest.asp</a><BR>\n" );
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