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A computer costs $1200. You pay $200 in cash and finance the rest for 2 years...

A computer costs $1200. You pay $200 in cash and finance the rest for 2 years at 4% interest compounded monthly. If you make monthly payments, what is the total amount of interest that you’ll end up paying? Round your answer to 2 decimal places. (See page 83 (video 61)) (Answer: $42.08)

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Expert Solution

Monthly rate of interest = 4%/12 = 0.33333%

Number of months = 12*2 = 24

Monthly payment = Amount of Loan/PVAF(0.3333%, 24 periods)

= 1000/23.02826

= $43.4249

i.e. $43.42

Total Interest = Total payments - Amount borrowed

= 43.42*24 - 1000

= $42.08

Hence, the answer is $42.08

jeff jeffy answered 2 years ago
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