Question

A sailboat cost $35000. you pay 20% down and amortize the rest with equal monthly payments over a 12 year period. if you must pay 8.75% compounded monthly. what is your monthly payment

Answer 1

Total cost = $35,000
Down payment = 20% of $35,000 = $7,000

P = 35,000 - $7,000 = $28,000, the amount of the loan.
r = 8.75% = 0.0875, the interest rate
n = 12, compoundings per year
t = 12, the nmber of years

Note that
1 + r/n = 1.007292
nt = 144
The value of the loan is
A = P*1.007292¹⁴⁴ = $79,709.99

Monthly payment = $79,709.99/144 = $553.54

Answer: $553.54