Expert: Ahmed Salami - 5/27/2009

Question
On a purchase of $120, a store offered a payment plan consisting of a $20 down payment and 12 monthly payments of $10 each. What percent of the purchase price, to the nearest tenth of a percent, did the customer pay in interest by using this plan?

Answer
Hi Shruti,
The total amount paid = 20 + 12x10
                     = 20 + 120
                     = $140
Interest paid = $140 - $120
             = $20
Percentage on purchase price = 20/120 x 100%
                            = 16.7% (to the nearest tenth)

Regards