Paul has an eight-year loan with a principal of $26,900. The loan has an interest rate of 8.18%, compounded quarterly. If Paul pays $1,527 in service charges and makes quarterly payments on his loan, what will his total finance charge be when the loan is repaid? Round all dollar values to the nearest cent.

There are 8 × 4 = 32 quarterly payments, and the quarterly interest rate is 8.18% ÷ 4 = 2.045%. Using the loan-payment formula gives a quarterly payment of about $1,153.73; 32 payments total $36,919.36. Subtract the $26,900 principal and add the $1,527 service charge: $36,919.36 − $26,900 + $1,527 = $11,546.36. The total finance charge is therefore choice B, $11,546.36.

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