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.

Use the monthly rate, 0.0475 ÷ 12, and 108 payments (9 × 12) in the loan payment formula. The monthly payment is about $121.66, so the total paid toward the loan is about 108 × $121.66 = $13,139.28. Subtract the $10,675 principal to get $2,464.28 in interest; adding $939.25 in service charges gives a total finance charge of $3,403.53, choice C.

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