You have just finished paying off your $35,125 loan, a feat which took ten years of quarterly payments. The loan had an interest rate of 7.44%, compounded quarterly. If you also paid $5,180.70 in service charges, what percentage of the total cost was made up by your finance charges? Round all dollar values to the nearest cent.

There are 10 × 4 = 40 quarterly payments, and the quarterly interest rate is 7.44% ÷ 4 = 1.86%. Using the loan payment formula gives a payment of about $1,252.59, or $50,103.60 in total payments. Subtracting the $35,125 loan and adding $5,180.70 in service charges gives about $20,159.30 in finance charges; dividing by the total cost of $55,284.30 gives about 36.47%. The correct choice is 36.47%.

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