Question

Section 1.5: Mortgages and Credit Cards 4. Vivian financed a new $1,250 television at 13.5% for 54 months. How much will she have to pay every month to pay this off?

Answer 1

The monthly payment, M, is computed as follows:

`M=(P((r)/(12))(1+(r)/(12))^n)/((1+(r)/(12))^n-1)`

where

P is the amount borrowed

r is the annual interest rate, as a decimal

n is the number of months

Substituting with P = $1,250, r = 0.135 (= 13.5/100), and n = 54 months, we get:

`\begin{gathered} M=(1250((0.135)/(12))(1+(0.135)/(12))^(54))/((1+(0.135)/(12))^(54)-1) \\ M=31.01\text{ \$} \end{gathered}`

She will have to pay $31.01 every month.