Question

Linda financed a new $1,850 television at 8% for 36 months. How much will she have to pay every month to pay this off? Round your answer to the nearest cent.

Answer 1

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We know the formula to calculate A , the montly amount. It is:

A =P*i/(1-(1+i)^-n

where, i = monthly rate = (1+annual rate)^1/12 -1 = (1+.08)^1/12 -1 = 1.00643403-1 = .00643 or .64%

and, P = loan amount = $1850

n = total number of payments = 36

So, A = (1850*.00643)/(1-(1+.00643)^(-36))

A=$57.73

So, montly installments come out to be $57.73