What is the actual finance charge for the first three months

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Reference no: EM131919684

Peg Gasperoni bought a $50,000 life insurance policy for $220 per year. Ryan Life Insurance Company sent her the following billing instructions along with a premium plan example: "Your insurance premium notice will be mailed to you in a few days. You may pay the entire premium in full without a finance charge or you may pay the premium in installments after a down payment and the balance in monthly installments of $55. The finance charge will be added to the unpaid balance. The finance charge is based on an annual percentage rate of 18%." If the total policy premium is: And you put down: The balance subject to finance charge will be: The total number of monthly installments ($30 minimum) will be: The monthly installment before adding the finance charge will be: The total finance charge for all installments will be: And the total deferred payment price will be: $220 $55.00 $165.00 3 $55.00 $5.27 $225.27 $320 $75.00 $245.00 5 $55.00 $10.42 $330.42 $420 $100.00 $320.00 6 $55.00 $17.38 $437.38 Peg feels that the finance charge of $5.27 is in error. Check your answer. a. What is the actual finance charge for the first three months? (Round your answer to the nearest cent.) Finance Charge $ b. Is she correct? Yes No

Reference no: EM131919684

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