Question

McTavish wants to buy a new car worth $20,000. He pays $2,000 deposit and agrees to pay $400 at the end of each month as long as necessary. Find the concluding payment one month later if interest is at 12% p.a. compounding monthly

Answer 1

$$20000-20000=18000$$

$${18000\over 400}= 45months$$

$$P(1+{r\over n})^{nt}$$

$$400(1+{12\over100})^{3.75}$$

n is 3.75 because its 45 months converted to years.

$$611.825× 45months$$ $$27532.1476+2000=29532.1476$$