Answer to Question #289716 in Financial Math for Nick

Question

A vending treasury is purchased for RM 2,800 in cash with RM 700 down payment and fourteen monthly payments. If the interest calculated is 10% per annum, using the fixed rate equation calculation find:

I. Total interest charged

Secondly. monthly payment

Answer 1

Solution:

Amount need to borrow = 2800-700 = 2100

Monthly Rate $= \dfrac{10\%}{12} = 0.8333\%$

Monthly Payment $= \dfrac{Amount\ need\ to\ borrow}{\dfrac{1-(1+r)^{-n}}r}$

$= \dfrac{2100}{\dfrac{1-(1+0.8333\%)^{-14}}{0.8333\%}}$

=$159.54

Total interest charged = Amount to be paid in total - Amount Borrowed

$=14\times159.54-2100$

=$133.60