Question

you plan to buy a boat for $10,000 and the terms are 20% down payment with the balance to be paid over 40 months in equal monthly installments. If the first payment is one month from today and the interest rate is 24% per year, what is the value of each installment? (round to the nearest dollar)

Answer 1

Loan Amount = Purchase Price * ( 1 - Down payment)

= 10000 * ( 1 - 20%)

= $8000

Monthly Payment = P * R *(1+R)^N / [(1+R)^N -1]

= 8000 * (24%/12) * ( 1+(24%/12))^40 / [ ( 1+(24%/12))^40 -1]

= 8000 * 2% *(1.02)^40 / [(1.02)^40 -1]

= 160 * 2.20803966361 / [2.20803966361 -1]

= 353.286346178 / [1.20803966361]

= 292.44598238

Monthly Payment = $292.44598238