question about math?
Stacie Howard purchased a water softener for $450. She made a down payment of $50 and paid the balance off in 36 monthly payments. Find the monthly payment if the finance charge was 9% of the amount financed. Round the answer to the nearest cent.
- llafferLv 79 months agoFavourite answer
Presuming monthly interest, this is the loan payment equation:
P = r(PV) / [1 - (1 + r)^(-n)]
P = monthly payment
PV = Present Value (or principal)
r = rate per period
n = number of periods
If 9% is the annual rate, then the rate per period is 9/12 % or 0.75 % (or 0.0075)
There are 36 periods.
The PV is $400.
If we substitute this info into what we have, here's what is left:
P = 0.0075(400) / [1 - (1 + 0.0075)^(-36)]
I'll continue to use decimal approximations rounded to 7-8 digits but will attempt to keep the number as-is in the calculator to reduce errors due to rounding. Simplifying this we get:
P = 0.0075(400) / [1 - (1.0075)^(-36)]
P = 3 / (1 - 0.764149)
P = 3 / 0.2358510
P = $12.72 (rounded to the nearest penny)