Answer to Question #140358 in Finance for Jenelle Daniel

Question

On December 31, 2019, Speedo’s Limited bought a yacht for $55,000, but made a down payment of $10,000. Speedo’s agreed to pay the balance in 10 equal end-of-year instalments and 10% interest on the declining balance. Calculate the annual payments.

Answer 1

The annual payment is:

$P = \frac{0.1*45,000}{1 - (1 + 0.1)^{-10}} = 7,323.54.$