Sue Stitch buys a sewing machine. The price, including tax, is $575.00. She finances the sewing machine over 24 months after making a $25 down payment. The true annual interest rate is 15%. What are Sue's monthly payments (principal plus interest)?
To the nearest penny, c = $.
Total of payments = amount financed + c = $.
Total of payments ÷ number of payments = monthly payment = $ .
c=85.94
total of payments=635.94
monthly payments=26.50
Po = 575-25 = $550 = Amount of loan.
I = Po*r*t = 550*0.15*2yrs = $165.
P = Po + I = 550 + 165 = $715 = Total
cost.
P/t = 715/24mo. = $29.79/mo.
Sue Stitch buys a sewing machine. The price, including tax, is $575.00. She finances the sewing machine over 24 months after making a $25 down payment. The true annual interest rate is 15%. What are Sue's monthly payments (principal plus interest)?
To calculate Sue's monthly payments, we first need to find the total amount financed. We know that the price of the sewing machine, including tax, is $575.00, and Sue made a $25.00 down payment.
Total amount financed = Price including tax - Down payment
= $575.00 - $25.00
= $550.00
Next, we need to calculate the interest on the financing. The true annual interest rate is given as 15%. However, to find the monthly interest rate, we need to divide this by 12.
Monthly interest rate = Annual interest rate / 12
= 15% / 12
= 0.15 / 12
= 0.0125
Now, we can calculate the monthly payment using the formula:
Monthly payment = (Principal + Interest) / Number of payments
Plugging in the values, we have:
Principal = Total amount financed = $550.00
Interest = Monthly interest rate * Total amount financed
= 0.0125 * $550.00
To calculate the total payment (principal + interest), we add the principal and interest. Finally, we divide the total payment by the number of payments (24 months) to get the monthly payment.
Total payment = Principal + Interest
= $550.00 + (0.0125 * $550.00)
= $550.00 + $6.875
= $556.875
Monthly payment = Total payment / Number of payments
= $556.875 / 24
= $23.203125
To round to the nearest penny, Sue's monthly payment would be $23.20.