Hi, I recently posted this but the answer given and the method was completely st
ID: 2763677 • Letter: H
Question
Hi, I recently posted this but the answer given and the method was completely strange to me.
Can someone explain how to get the answer and why we use that method/formula?
Many thanks
Mark has borrowed $15744 to finance the purchase a second hand car. The loan is to be repaid over five years with monthly payments. Interest on the loan is charged monthly at 8.2% pa. How much will each payment be, if Mark makes the first payment right away, on the day the car is delivered? (Give your answer to the nearest cent, omitting the dollar sign.)Explanation / Answer
if the loan amount $ 15744
no of year repayments 5 years or 12*5=60 months
interest charged 8.2% p.a
if the first payments make on the day the card is delivered
Diminishing method(monthly reducing balane)
[P x R x (1+R)^N]/[(1+R)^N-1]
where P stands for the loan amount or principal, R is the interest rate per month [if the interest rate per annum is 8.2%, then the rate of interest will be 8.2/(12 x 100)], and N is the number of monthly instalments.
after calculating with this formula the monthl payments comes to $ 319
addition information: total interest payble $ 3370
total payment(principal + interest)= $ 19114
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