Answer:
The cash equivalent price of the tv set is P5849.37
Step-by-step explanation:
The total amount paid monthly is:
The initial down payment of P1800 and 24 payments of P950 (2 years = 24 months)
Then, the price paid with interest is:
Now, the formula for the monthly compound interest is:
Where:
A is the amount after t years
P is the initial amount (what we want to find)
R is the rate of compound in decimal
t is the number of years of compounding
In this case:
• A = 24600 (the total paid if compounded)
,
• P is what we want to find
,
• r = 0.06 ( to convert percentage to decimal, we divide by 100: 6%/100 = 0.06)
,
• t = 24 (2 years)
To the nearest cent, the cash price is 5849.37