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

First calculate the amount financed
Amount financed=725−50=675

The formula is
I=(2yc)/(m (n+1))
Solve for c to get
C=(I×m×(n+1))/2y
C=(0.14×675×(24+1))÷(2×12)=98.44

Total of payments=675+98.44=773.44

Monthly payment is
773.44÷24=32.23

Hope it helps!

Answer 2

Total payment = $ 773.44

Monthly payment = $ 32.23

Amount of Interest = $ 98.44

Step-by-step explanation:

Given,

The total price = $725.00,

Down payment = $ 50,

So, the amount financed = 725 - 50 = $ 675,

Since, true interest formula,

`I=(2yc)/(m(n+1))`

Where,

y = payments per year,

c = total interest paid,

m = amount financed,

n = total number of payment,

Here, y = 12, I = 14% = 0.14, m = $ 675, n = 24,

By substituting the values,

We get,

`0.14=(2* 12* c)/(675(24+1))`

`0.14 = (24c)/(675(25))`

`\implies c = (0.14* 16875)/(24)=(2362.5)/(24)\approx 98.44`

Thus, amount of interest, c = $ 98.44,

Total of payments = m + c = 675 + 98.44 = $ 773.44,

Also,

`\text{Monthly payment}=\frac{\text{Total of payments}}{\text{Number of payments}}`

`=(773.44)/(24)`

= $ 32.23