A conditional sale contract requires two payments 3 and 6 months after the date of the contract. Each payment consists of $1,900 principal plus simple interest at 10.5% on $1,900 from the date of the contract. One month into the contract, what price would a finance company pay for the contract if it requires an 16% rate of return on its purchases?

Conditional Sale Contract

An agreement to sell an asset where the full payment is due after certain conditions have been met.

Simple Interest

Interest calculated on the principal amount of a loan or deposit, without compounding over time.

Finance Company

A business that provides loans to individuals and commercial customers that may not be able to secure financing through traditional banking channels.