Question

Follow the steps above and find c, the total of the payments, and the monthly payment. Choose the right answers. Tom Slick buys a set of tires for his car. The price, including tax, is $950.00. Tom finances the tires over 12 months after making a $50 down payment. The true annual interest rate is 18%. What are his monthly payments (principal plus interest)? To the nearest penny, c = $. Total of payments = amount financed + c = $. Total of payments ÷ number of payments = monthly payment = $.

Answer 1

Monthly payment = $81.20

Explanation:

The tires price including tax = $950

The down payment = $50

Remaining amount = $950 - $50 = $900

He has to take loan for $900

P = $900

Rate per monthly =18%/12 = 18/100 ÷12 = 0.18÷12 =0.015

n =12 months

Here we have to use the formula

Monthly payment = [p*r*(1+r)^n ÷ (1 + r)^n - 1]

= (900*0.015*(1+0.015)^12 / (1+0.015)^12 - 1)

= (13.50*1.015^12) ÷ [(1.015)^12 -1]

= 16.14 ÷ [ 1.20 -1]

=16.24 ÷0.20

= $81.20

Monthly payment = $81.20

Thank you.