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Do the Math #1 Monthly Payments andFinance Charges. Kimberl

    Do the Math #1: Monthly Payments andFinance Charges. Kimberly Jensen and Rebecca Parkerof Mankato, Minnesota, are both single. The pair share an apartment on thelimited resources provided through Kimberly’s disability check from SocialSecurity and Rebecca’s part-time job at a grocery store. The two grew tired oftheir old furniture and went shopping. A local store offered credit at an APRof 16 percent, with a maximum term of four years. The furniture they wish topurchase costs $2,800, with no down payment required. Using Table 7-1 or theGarman/Forgue companion website, make the following calculations:a) What is the amount of their monthly payment if theyborrow for four years? b) What are the total finance charges over that fouryear period? c) How would the payment change if Kimberly and Rebeccareduced the loan term to three years? d) What are the total finance charges over that three-year period? e) How would the payment change if they could afford adown payment of $500 with four years of financing? f) What are the total finance charges over thatfour-year period given the $500 down payment? g) How would the payment change if they could afford adown payment of $500 with three years of financing? h) What are the total finance charges over thatthree-year period given the $500 down payment? Do the Math #5: Rule of 78s. Aaron Carson of Hays, Kansas, obtained a two-yearinstallment loan for $1,500 to buy some furniture eight months ago. The loanhad a 12.6 percent APR and a finance charge of $204.72. His monthly payment is$71.03. Aaron has made eight monthly payments and now wants to pay off theremainder of the loan. The lender will use the Rule of 78s method to calculatea prepayment penalty.a) How much will Aaron need to give the lender to payoff the loan? b) What is the dollar amount of the prepayment penaltyon this loan?

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