Answer to Question #297052 in Financial Math for Denver

Question

<e> 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:

1. Total interest charged

2.Secondly. monthly payment

Answer 1

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