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On December​ 31, Beth Klemkosky bought a yacht for ​$90,000. She paid ​$12,000 down and agreed...

On December​ 31, Beth Klemkosky bought a yacht for ​$90,000. She paid ​$12,000 down and agreed to pay the balance in 9 equal annual installments that include both the principal and 6 percent interest on the declining balance. How big will the annual payments​ be?

On December​ 31, Beth Klemkosky bought a yacht for ​$90,000 and paid ​$12,000 down, how much does she need to borrow to purchase the​ yacht?

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Answer #1

Price of the yatch = $90,000

Down payment = $12,000

Amount borrowed(Principal) = Price of the yatch - Down payment = 90,000 - 12,000 = $78,000

No of installments = 9

Rate of interest = 6%

Using PMT function in excel to calculate annual payments:

Therefore, annual payments is equal to $11,467.73

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