Question

You wish to buy a speed boat that costs $45,000. You will put down 10% down payment and finance the remaining cost of the boat with a 6-year fully amortized loan at an annual rate of 12%. If you want to make equal quarterly payments with the first payment three months from now, how much will your quarterly payment be?

Answer 1

- Loan Amount = Boat Cost*(1- % of Downpayment)

Loan Amount = $45,000*(1-0.10)

Loan Amount = $40,500

Calculating the Quarterly Loan payment:-

Where, P = Loan amount = $40,500

r = Periodic Interest rate = 12%/4 = 3%

n= no of periods = 6 years*4 = 24

Quarterly payments = $2391.42