Final answer:
Jacob's monthly payment for the camping equipment, after making a 10% down payment on a $3,450 purchase with a 9% add-on interest rate for a 2-year installment loan, will be $152.66.
Step-by-step explanation:
Jacob purchases camping equipment at a cost of $3,450 and takes out an installment loan with a 9% add-on interest rate. He must make a 10% down payment and then equal monthly payments over 2 years. To calculate the monthly payments, we first determine the amount of the down payment, subtract this from the total cost to find the amount financed, calculate the total interest, add this to the amount financed, and divide by the total number of installments.
Step 1: Calculate the down payment.
10% of $3,450 is $345.
Step 2: Subtract the down payment from the total cost to find the amount financed.
$3,450 - $345 = $3,105.
Step 3: Calculate the total interest on the loan.
9% of $3,105 over 2 years is $3,105 * 0.09 * 2 = $558.90.
Step 4: Add the total interest to the amount financed to get the total amount to be repaid.
$3,105 + $558.90 = $3,663.90.
Step 5: Divide the total amount to be repaid by the number of months in 2 years (24 months) to find the monthly payment.
$3,663.90 / 24 = $152.66.
Therefore, Jacob's monthly payments will be $152.66.