math of investment

posted by .

An article cost $29885. To buy this article, a down payment of $3420 is needed.If interest charged is 16% compunded quarterly, how much should be paid at the end of every 3 months for 1 year in order to payoff the balance?

please explain,i don't understand...thank you very much

  • math of investment -

    This is what is called an amortization problem. It is usually solved with a table or an iterating program. Here is a way to get the approximate answer directly. The principal due at the beginning is 29885-3420 = $26465. Over one year, with a declining balance, the average balance is $13232 and the interest on that amount over one year will be $2117.
    It the loan is paid off in equal quarterly amounts, they must add up to 26465 + 2117 = $28582. The quarterly paymewnts should be 1/4 of that, or $7146.

    Check:
    Balance due at start (after down payment):
    26465
    After one quarter: add 1058.60 for interest due and subtract 7146 principal payment. Remaining balance = 20,377.60
    After first quarter: add $815.10 interest and subract 7146 principl. Remaining balance = 14,046.70
    After third quarter: add 561.87 interest and subtract 7146. Remaining balance = $7462.57
    After fourth quarter: add $298.50 interest and subtract 7146. Remaining balance = $615.

    For a second iteration, I would recommend adding $154 to each quarterly ayment, to get rid of the $615 deficit on the first attempt.

    That makes the quarterly payment $7300 after one iteration. I end up overpaying $38 this way, so the third iterated answer is $10 less per quarter, or $7290.

  • math of investment -

    27523.60

  • math of investment -

    There is a handy amortization calculator at this web site:
    http://www.yona.com/loan/

    Enter the initial loan balance of 26465, the 16$ interest rate, and 4 quarterly payments.

    Using it, with quarterly compounding you should get an exact loan payment of $7290.84

  • math of investment -

    9765.25

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. math

    what formula would i use to solve for this: Loan Interest A developer needs $80,000 to buy land. He is able to borrow the money at 10% per year compunded quarterly. How much will the interest amount to if he pays off the loan in 5yrs?
  2. FIN

    After 12 months of making extra payments, what will be the loan balance?
  3. math

    Ever wonder how much a house “actually” costs?
  4. math

    how long to the nearest year will it take an investment in germany to double its value if the interest is compunded every six months
  5. math

    An article can be bought for cash at $20,000.00. A customer bought it on hire purchase by paying a deposit of 20%. An interest of 10% was charged on the remaining balance and he was required to pay the balance in 15 monthly installments. …
  6. Math

    Jane needs $30,000 to buy another new car in eight years. How much should she deposit at the end of each half year into an account that earns 4% interest compunded semianually?
  7. Math

    Price of article = $315.50 Down payment = $31.55 Monthly payment amount = $16.50 Duration of payments = 20 months True annual interest rate to the nearest tenth= %
  8. Math

    I need help with this I keep putting the numbers in wrong on the formula ! PLEASE HELP Price of article = $315.50 Down payment = $31.55 Monthly payment amount = $16.50 Duration of payments = 20 months True annual interest rate to the …
  9. Mathematics and investment

    1. Angelo wants to renovate his house in 3 years. He estimates the cost 300,000. How much must Angelo invest now at 8% compounded quarterly in order to have 300,000 3 years from now. 2. Angelo Ancis want to save 500,000 in 5.5 years …
  10. Math

    Connie wants to have an annuity payment of $2,000 at the END of every three months. How much should she deposit now at 6% interest, compounded quarterly, to yield this payment for 3 years?

More Similar Questions