Question

On June 30, Year 3, PPI purchased a machine for $100,000. The down payment was $15,000, and the balance will be paid in 48 equal monthly payments, including interest at 18% compounded monthly. What is the amount of the monthly payment if the first payment is due one month from the date of the purchase?

Answer 1

monthly rate = 18/12 =1.50%

Number of months = 48

Amount due = 100000-15000 =85000

Monthly payment = Amount due /PVA 1.5%,48

                         = 85000/34.04255

                        = $ 2496.88

**PRESENT VALUE ANNUITY FACTOR CAN BE FIND USING FINANCIAL CALCULATOR (N=48,I=1.5%,PMT =1) OR FROM PRESENT VALUE ANNUITY TABLE .