so you are saying that i should label
p = 30
i = 0.0125/12 = 0.0010416666666666666666666666666667
n = 12(3) = 36
then plug it into what formula ?
Problem:
Stereo shack sells a stereo system for $600 down and monthly payments of $30 for the next 3 yrs. In the interest rate is 1.25% per month on the unpaid balance, find the cost of the stereo system.
Answer:
$1465.42
For Further Reading
math, question - drwls, Friday, June 22, 2007 at 2:44pm
The amount of loan that gets amortized at $30 a month and 1.25% monthly interest is $865.42. Add the down payment to that and you get the original price.
There is no easy formula to plug into. You need an amortization worksheet. I thought I provided a link to one:
(Broken Link Removed)
Leaver the principal blank: it will calculate it. The annual interest rate is 15%; the payment is $30 and the number of payments is 36. Hit "enter" and you will get the financed amnount, which is remainder of the purchase price after down payment
Yes, you have correctly labeled the variables:
p = $30 (monthly payment)
i = 0.0125/12 = 0.0010416666666666666666666666666667 (monthly interest rate)
n = 12*3 = 36 (number of payments)
To solve the problem, you would use an amortization worksheet or calculator. Unfortunately, the link you provided is broken, so I suggest finding another reliable source for an amortization worksheet or calculator.
If you have access to an Excel spreadsheet, you can also use the PMT function to calculate the monthly payment and then work backwards to find the loan amount.
Alternatively, you can use a formula called the Loan Amortization Formula, which calculates the loan amount based on the payment, interest rate, and term. Here is the formula:
Loan Amount = (Payment / Monthly Interest Rate) * (1 - (1 + Monthly Interest Rate)^(-Number of Payments))
In this case, the loan amount would be:
Loan Amount = ($30 / 0.0010416666666666666666666666666667) * (1 - (1 + 0.0010416666666666666666666666666667)^(-36))
Calculating this equation will give you the financed amount, which is the remaining purchase price after the down payment.
To find the total cost of the stereo system, you would add the financed amount to the down payment:
Total Cost = Financed Amount + Down Payment
In this case, the total cost of the stereo system would be $865.42 + $600 = $1465.42.