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A sailboat costs $22,717. You pay 5% down and amortize the restwith equal monthly payments...

A sailboat costs $22,717. You pay 5% down and amortize the rest with equal monthly payments over a12-year period. If you must pay 7.8% compounded monthly,what is your monthly payment?How much interest will you pay?

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Expert Solution

Loan amount = price of Boat*(1- % of doenpayment)

Loan amount = $22717*(1-0.05)

Loan amount = $21,581.15

Calculating the Monthly Payments:-

Where, P = Loan amount = $21,581.15

r = Periodic Interest rate = 7.8%/12 = 0.65%

n= no of periods = 12 years*12 = 144

Monthly payment = $231.25

b). Total Interest you pay = (No of payments*Monthly payment) - Loan Amount

Total Interest you pay = (144*$231.25) - $21,581.15

Total Interest you pay = $11,718.85

jeff jeffy answered 2 years ago
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