Question

At a recent boat show, Nautica Bank was offering boat loans for up to 5 years with APRs of 11.5%. On new boats, a 25% down payment was required. Scott Vaughn wanted to finance a $51,000 boat for 5 years. Round your answer to the nearest cent. a. What would be the finance charge on the loan? $ b. What would be the monthly payment? Round your answer to the nearest cent. $

Answer 1

a.	Finance charge	$ 12,223.03
b.	Monthly Payment	$       841.22
Working:
	# 1
	Loan amount	=	Cost of boat*(1- Down Payment ratio)
		=	51000*(1-0.25)
		=	$ 38,250.00
	# 2
	Monthly Payment	=-pmt(rate,nper,pv,fv)
		= $ 841.22
	Where,
	rate	=	11.5%/12	=	0.00958333
	nper	=	5*12	=	60
	pv			=	$ 38,250.00
	fv			=	0
	# 3
	Total repayment	=	Monthly Payment	*	Months
		=	$       841.22	*	60
		=	$ 50,473.03
	# 4
	Finance Charge	=	Total repayment	-	Loan amount
		=	$ 50,473.03	-	$ 38,250.00
		=	$ 12,223.03