Question 891732: 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 14% (add-on rate). If the refrigerator at Sears costs 1,538 plus 5% sales tax , and Karen and Wayne plan to pay for the refrigerator for 3 years, what is the monthly payment?.(Round your answer to the nearest cent.)
Answer by JulietG(1812)   (Show Source):
You can put this solution on YOUR website! That's a very expensive refrigerator for a couple that has no savings account or apparent financial plan. Karen and Wayne need to live within their means, and put more money in savings for emergencies such as this.
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Initial cost of refrigerator is $1,538
Sales tax of .05 = $76.90
Total financed amount = $1614.90
The add on, assuming they are also financing the tax, is 1614.90 * .14 = $226.09
$1614.90 + $226.09 = $1840.99
If their payments are spread out equally over 36 months, and there is no additional finance charge or interest, the monthly payments are $1840.99 / 36 = $51.14
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