Question

A local gym recently got an underground pool installed from Swim Inc. The pool cost the gym $27,000. The gym made a down payment of 15% of the total cost of the pool and financed the rest through Swim Inc. for 3 years at 19% per year compounded monthly. How much are their monthly payments?

Answer 1

Monthly installment =$840.791

Step-by-step explanation:

Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.

The monthly installment is computed as follows:

Monthly installment= Loan amount/annuity factor

Loan amount; 27,000 - (15%× 27,000) = 22,950

Annuity factor = (1 - (1+r)^(-n))/r

r -monthly rate of interest, n- number of months

r- 19%/12 = 1.58% = 0.0158, n = 3× 12 = 36 months

Annuity factor = (1- 1.0158^(-36))/0.0158 = 27.295

Monthly installment = 22,950 /27.295

$840.791