Question

Carl Carpenter buys a drill press. The price, including tax, is $725.00. He finances the drill press over 24 months after making a $50 down payment. The true annual interest rate is 14%. What are Carl's monthly payments (principal plus interest)?

Amount of Interest to the nearest penny, c = $ .
Total of payments = amount financed + c = $ .
Total of payments ÷ number of payments = monthly payment = $ .

Answer 1

(0.14×675×25)÷(2×12)=98.44
675+98.44=773.44
773.44÷24=32.23

Answer 2

$36

Explanation:

The price of the drill press= $725

Down payment = $50

So, principal amount = $725-$50 =$675

He finances the drill press over 24 months

Time = 24 months = 2 years

No. of payments = 24

Rate of interest = 14 % = 0.14

`Interest = principal * rate * time`

Where time must be in years

So,
`Interest =675 * 0.14 * 2`

`Interest(c) =189`

Now we are given that Total of payments = amount financed + c

Total of payments = 675+189 =$864

Monthly payment = Total of payments ÷ number of payments

So,Monthly payment = 864÷24

Monthly payment = $36 = 3600 pennies (1 dollar = 100 pennies).

Hence the Carl's monthly payments is $36