Tamora just made the last of her monthly payments on her loan. she had been making these payments for the past nine years. the loan had a principal of $10,675 and an interest rate of 4.75%, compounded monthly. in addition, tamora paid $939.25 in service charges. what was tamora’s total finance charge? round all dollar values to the nearest cent. a. $939.25 b. $11,614.25 c. $3,403.53 d. $2,464.28 please select the best answer from the choices provided a b c d

It is defined as the interest on the principal value or deposit and the interest which is gained on the principal value in the previous year.

We have:

Principal amount(Loan principal) = $10,675

Interest rate = 4.75 %

Monthly rate = 4.75/12% ⇒0.39583% ⇒ 0.00395

Additional amount she paid in service charge = $939.25

Number of months = 9×12 = 108 months

We can find the total finance charge as follows:

Finance charge = Total amount repaid +service charge - Loan principal

The formula for the monthly payment of the loan is given by:

[tex]\rm Monthly \ payment = \frac{Loan \ principal }{\frac{(1-(1+r)^-^n)}{r} }[/tex]

[tex]\rm Monthly \ payment = \frac{10675}{\frac{(1-(1+0.00395)^-^{108})}{0.00395} }[/tex]

After calculating, we get:

Monthly payment = $121.66

For 108 months, Tamora paid:

= 121.66×108

= $13,139.23

The finance charge will be:

= $13,139.23+$939.25-$10,675

= $3,403.53

Thus, Tamora’s total finance charge was $3,403.53 if Tamora paid in addition of $939.25 in service charges option (c) is correct.

Learn more about the compound interest here:

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