Question

In: Economics

Suppose that you buy new kitchen appliances (i.e. equipment) for your home that costs a total...

Suppose that you buy new kitchen appliances (i.e. equipment) for your home that costs a total of $3,600 but you need to have a loan. The store can give you a loan. You take out a 18-month loan with a 6.25% discount per year.

(a) What are your monthly payments?
(b) How much do you still owe after 12 payments?
(c) What is the total interest you will pay after you have finished paying off your loan?

Expert Solution

Loan amount = $;3,600

Interest rate = 6.25% per year

Time = 18 months

a. Assume the monthly payment is $;A.

Monthly payment = $ 210

b. After 12 payments number of payment left to be paid = 18 - 12 = 6

The value after 12th payment can be determined using the following formula

c. Total payment = $ 210 × 18 = $ 3,780

Interest paid = $ 3,780 - 3,600 = $ 180

I have solved it using excel too got the same value kindly refer the attached amortization schedule.

Please contact if having any query will be obliged to you for your generous support. Your help mean a lot to me please help. Thank you

Rahul Sunny answered 2 years ago

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