Question

If you buy a computer directly from the manufacturer for $2,272 and agree to repay it in 48 equal installments at 2.02% interest per month on the unpaid​ balance, how much are your monthly​ payments? How much total interest will be​ paid?

Answer 1

Given,

Loan amount = $2272

No. of monthly installment (n) = 48

Interest rate per month (r) = 2.02% or 0.0202

Solution :-

Monthly payment

= (Loan amount x r) [1 - (1 + r)^-n]

= ($2272 x 0.0202) [1 - (1 + 0.0202)^-48]

= $45.8944 [1 - (1.0202)^-48]

= $45.8944 [1 - 0.38291702724]

= $45.8944 0.61708297276

= $74.37

Total of 48 monthly payments = $74.37 x 48 = $3569.76

Total interest = Total of 48 monthly payments - Loan amount

= $3569.76 - $2272 = $1297.76