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A machine is purchased for $ 20,000 The terms are 10% down and and 2% per month on the unpaid balance for 60 months. how much are monthly payments. What annual effective interest rate is being charged

 Feb 14, 2020

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 #1
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10% of 20,000 is 2000. 20,000-2000 = 18000. 18000/60 = 300. There you go. 300 dollars a month, for 60 months. I don't see anything about interest though...

 Feb 14, 2020
 #2
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$20,000 - (10% * 20,000) =$18,000 amount of loan.


N=60; R=0.02;PV=18000; PMT=PV*R*((1 + R)^N) / ((1 + R)^(N) - 1).


PMT =$517.82 - This is the blended monthly payment.


Effective annual rate =[1 + 0.02]^12 =1.2682 - 1 * 100 =26.82%

 Feb 14, 2020

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