Tom Slick buys a set of tires for his car. The price, including tax, is $950.00. Tom finances the tires over 12 months after making a $50 down payment. The true annual interest rate is 18%. What are his monthly payments (principal plus interest)?
The price of the car is 950 dollars. he paid 50 dollars for downpayment => 950 dollars - 50 dollars = 900 dollars to be paid for 12 months => 12 months = 1 year which have 18% annual interest. => 900 dollars * .18 = 162 dollars => 900 + 162 = 1062 dollars => 1062 / 12 = 88.5 dollars is his monthly
