1. Shawn buys a new computer. He will make monthly payments of $72 for the next 2 years. He is charged 16% per year compounded monthly. How much did Shawn borrow to purchase the computer?
This is the formula you would use to find the amount Shawn borrowed to buy his computer.
PV=P{[1 + R]^N - 1 / [1 + R]^N} / R
PV =72x{[1 + 0.16/12]^(2*12) - 1 / [1 + 0.16/12]^(2*12)} / (0.16/12)
PV =72 x{[1.0133333]^24 - 1 / [1.0133333]^24} / 0.0133333
PV =72 x{[0.3742188] / [1.37421882]} / 0.0133333
PV =72 x 20.42353905682.........
PV =$1,470.49 - This is the amount Shawn borrowed to buy the computer.
