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The total finance charge is $611.20 (Option c) for this compound interest.
Data Given
Principal, P = $4250
Rate of Compound Interest, R = 13.25%
Time, t = 24 months, i.e., 2 years
Since it is compounded monthly, n = 12
Calculating the Total Finance Charge
We know that the formula for total amount of finance charge in a Compound Interest is,
[tex]A=P\frac{r(1+r)^{n} }{(1+r)^{n} - 1}[/tex]
Substituting the values of P, R and n, we get,
[tex]A=4250\frac{13.25(1+13.25)^{24} }{(1+13.25)^{24} - 1}[/tex]
[tex]A = 611.20[/tex]
Thus, the total finance charge is $611.20
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