Question

tom buys a DvD player on 12 monthly payment. the cash price is $600.He pays 10% deposit and the store charges 9% interest. find the total amount Tom pays for the Dvd player

Answer 1

If he pays 10% deposit ($60) and the store charges 9% interest, then the monthly payments are...

Future value or loan value is

$FV = PV×(1 + i)^t,$

where ;

$PV$ is present value or price

$i$ is rate of interest

$t$ is the number of years.

Monthly payment is $MP = \frac {FV} {n}$

where n is the number of payments;

$MP = (600 - 60)×\frac{(1+0.09)} {12}$

=$49.05