Sakura purchased ski equipment for $1,248 using a six-month deferred payment plan. The interest rate after the introductory period is 23.79%. A down payment of $175 is required as well as a minimum monthly payment of $95. What is the balance at the beginning of the seventh month if only the minimum payment is made during the introductory period?
I know the answer is $637.13, I just can't remember the math I did to get to that answer.
Same for this problem,
Forrest purchased a car for $20,640. He made a down payment of $2,440. He applied for a five-year installment loan with an interest rate of 10.4%. What is the total cost of the car after five years?
The answer is $25,857.40.
If someone could explain to me how to do the math to get to these answers that would be great, thank you. :)
For the first question use the formula of the present value of annuity due The formula is Pv=pmt [(1-(1+r/k)^(-n))÷(r/k)]×(1+r/k) Pv present value? PMT monthly payment 95 R annual interest rate 0.2379 K compounded monthly 12 N time 7 months
Pv=95×((1−(1+0.2379÷12)^( −7))÷(0.2379÷12))×(1+0.2379÷12) =627.45 closed to 637.13 because the question mentioned the minimum monthly payment which is 95 while the exact monthly payment of 637.13 Is 96.47
The second question is the same and easier using the formula of the present value of annuity ordinary First find the present value by subtracting the amount of down payment From the purchase price 20,640−2,440=18,200 Now find the monthly payment using the formula of Pv=pmt [(1-(1+r/k)^(-kn))÷(r/k)] Solve for pmt PMT=pv÷[(1-(1+r/k)^(-kn))÷(r/k)] Pv 18200 R 0.104 K 12 N 5 years
