Question: 1. A new computer costs $995. A store offers a payment plan of only $45 a month for 2 years and a $100 down payment.

1.

A new computer costs $995. A store offers a payment plan of only $45 a month for 2 years and a $100 down payment.

a. What is the total cost of the payment plan.

b. How much is the finance charge of the store payment plan?

c. Using the simple interest formula, calculate the interest being charge.

2. A used car costs $8500. The dealer is willing to take a bi-weekly payment of $88.54 for 4 years. The dealer points out that $88.54 times 2 payments a month times 48 months = $8499.84. The dealer exuberantly points out that this amount is less than the cash price. Is the dealer really giving an interest free loan? If not how much is the finance charge?

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