Use an Annual Percentage Rate Table to Solve the Problem

question 157

Multiple Choice

Use an annual percentage rate table to solve the problem.

-A cattle rancher needs to construct a new silo in which to store cattle feed. The silo will cost $2000. The rancher pays 15% as a down payment and finances the balance for 60 months at an APR of 7.50%. Determine the rancherʹs total finance charge and monthly payment.

• A) Total finance charge = $368.22; Monthly payment = $34.47
• B) Total finance charge = $343.91; Monthly payment = $34.07
• C) Total finance charge = $273.02; Monthly payment = $32.88
• D) Total finance charge = $404.60 ; Monthly payment = $40.08

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Definitions:

Variable Costs

Expenses that vary directly with the level of production or volume of output.

Average Variable Cost

The total variable cost divided by the quantity of output produced, showing how variable costs change with output levels.

Cost Curves

Graphical representations of the costs associated with producing different quantities of goods, showing how costs change with changes in output.

Economic Cost

Cost to a firm of utilizing economic resources in production.