Solve the Problem

question 259

Multiple Choice

Solve the problem. Use an annual percentage rate table if necessary.
-A retired couple buys a new recreational vehicle (RV) for $42,000. They make a down payment of $13,000 and finance the balance at 9.0% APR over 60 months. Before making the 30th payment, the
Couple decides to pay the remaining balance on the loan. How much interest will the couple save
(use the actuarial method) ?

• A)$2810.71
• B)$2174.39
• C)$1918.14
• D)$1940.73

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Definitions:

Direct Material Usage

The quantity of raw materials or supplies consumed in the production of goods or services.

Raw Materials Inventory

The total cost of all components and materials stored that are intended to be used in production.

Accounts Payable

Accounts payable represents the company's obligation to pay off a short-term debt to its creditors or suppliers.

Conversion

The process of changing an asset or security into another form, such as converting preferred stock into common stock or converting currencies.