Karen and Wayne Need to Buy a Refrigerator Because Theirs

question 398

Multiple Choice

Karen and Wayne need to buy a refrigerator because theirs just broke. Unfortunately, their savings account is depleted, and they will need to borrow money in order to buy a new one. Sears offers them an installment loan at 11% (add-on rate) . If the refrigerator at Sears costs $1,500 plus 5% sales tax, and Karen and Wayne plan to pay for the refrigerator for 4 years, what is the monthly payment?

• A) $51.98
• B) $47.25
• C) $42.53
• D) $45.00
• E) $34.86

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Definitions:

Journal Entries

Records of financial transactions in order by date, used in accounting.

Retirement

The act of leaving one's job and ceasing to work, typically upon reaching a certain age, often associated with receiving pension or retirement benefits.

Interest Payment

The amount paid by a borrower to a lender as compensation for the use of borrowed money.

Semiannual Interest

Interest that is calculated and paid twice a year, commonly used in bonds and other fixed-income investments.