Cesar purchased a room air conditioner for $450 and made a a down payment of $90 and financed the rest over 20 months. If the monthly payment was $22.80, what was the interest?
22.8 * 20 = 456
456 - 360 = ?
So loan = 450-90 = 360
let the monthly rate be r
22.8( 1 - (1+r)^-20)/r = 360
1 - (1+r)^-20 = 360r/22.8
very difficult equation to solve, I will use Wolfram
http://www.wolframalpha.com/input/?i=solve+1+-+%281%2Br%29%5E-20+%3D+360r%2F22.8
using the logical answer of r = .0236523..
the annual rate compounded monthly would be
.0236523(12) = .2838
or
appr 28.38 % per annum compounded monthly , very high!
check:
22.8(1+.0236523^-20)/.0236523
= 359.99994
= $360
You probably want to use Ms Sue's answer.
I did not read the question carefully and read it as finding the interest rate.
To find the interest, we first need to calculate the total amount financed. We can do this by subtracting the down payment from the total cost of the room air conditioner.
Total amount financed = Total cost - Down payment
Total amount financed = $450 - $90
Total amount financed = $360
Next, we need to calculate the total payment over the repayment period. We can do this by multiplying the monthly payment by the number of months.
Total payment = Monthly payment * Number of months
Total payment = $22.80 * 20
Total payment = $456
The interest is the difference between the total payment and the total amount financed.
Interest = Total payment - Total amount financed
Interest = $456 - $360
Interest = $96
Therefore, the interest on the financed amount is $96.