Elbert purchased a boat for $13,125. He made a down payment of $4,500. He applied for a four-year installment loan with an interest rate of 9.3%. What is the total cost of the boat after four years?
Elbert purchased a boat for $13,125. He made a down payment of $4,500. He applied for a four-year installment loan with an interest rate of 9.3%. What is the total cost of the boat after four years?
13,125 - 4,500 =8,625 Amount of loan that Elbert took. You would this formula to calculate the monthly payments:
PV=P{[1 + R]^N - 1.[1 + R]^-N / R}=PV OF $1 PER PERIOD.
8,625 =P x [1+0.093/12]^(4*12) - 1 x [1+0.093/12]^-(4*12) / [0.093/12]
8,625 =P x 39.955671
P =8,625 / 39.955671
P = $215.86 Elbert monthly payment on his loan. Therefore the total cost of the boat:
[$215.86 x 48] + $4,500 =$14,861.28.
