Sheds R Us sells $600 sheds on a monthly payment plan over 2 years.
a) If the interest rate is 1.5% per month, find the monthly payment.
Answer = $
b) If instead the interest rate is 1.75% per month, find the monthly payment
Answer = $
can anyone help me with which format i should use .. have tried several, none of which seem to be correct.
To find the monthly payment for a shed sold on a monthly payment plan over 2 years, we can use the formula for calculating the monthly payment on a loan.
a) With an interest rate of 1.5% per month:
First, we need to convert the interest rate to a decimal by dividing it by 100:
1.5% = 1.5/100 = 0.015
Next, we can use the loan payment formula:
Monthly Payment = (Principal * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Payments))
Where:
Principal = $600
Monthly Interest Rate = 0.015 (from the interest rate of 1.5% per month)
Number of Payments = 2 years * 12 months/year = 24 months
Plugging in these values into the formula, we get:
Monthly Payment = (600 * 0.015) / (1 - (1+0.015)^(-24))
Calculating this:
Monthly Payment = (9) / (1 - (1.015)^(-24))
Monthly Payment ≈ $28.59
So, the monthly payment for a shed with an interest rate of 1.5% per month is approximately $28.59.
b) With an interest rate of 1.75% per month:
Following the same steps as above, we need to convert the interest rate to a decimal:
1.75% = 1.75/100 = 0.0175
Plugging in the new interest rate, we have:
Monthly Payment = (600 * 0.0175) / (1 - (1+0.0175)^(-24))
Calculating this:
Monthly Payment = (10.50) / (1 - (1.0175)^(-24))
Monthly Payment ≈ $30.76
So, the monthly payment for a shed with an interest rate of 1.75% per month is approximately $30.76.
To find the monthly payment, we can use the formula for calculating the monthly payment on a loan. The formula is:
Monthly Payment = (Loan Amount * Monthly Interest Rate) / (1 - (1 + Monthly Interest Rate)^(-Number of Months))
Let's calculate the monthly payments for both scenarios:
a) If the interest rate is 1.5% per month and the shed costs $600 over 2 years (24 months):
Loan Amount = $600
Monthly Interest Rate = 1.5% = 0.015
Number of Months = 24
Plugging these values into the formula:
Monthly Payment(a) = (600 * 0.015) / (1 - (1 + 0.015)^(-24))
b) If the interest rate is 1.75% per month and the shed costs $600 over 2 years (24 months):
Loan Amount = $600
Monthly Interest Rate = 1.75% = 0.0175
Number of Months = 24
Plugging these values into the formula:
Monthly Payment(b) = (600 * 0.0175) / (1 - (1 + 0.0175)^(-24))
Now, let's calculate the values of Monthly Payment(a) and Monthly Payment(b).
a. P = Po(1+r)^n
Po = $600
r = 1.5%/100 = 0.015 = Monthly % rate
expressed as a decimal.
n = 12comp./yr. * 2yrs. = 24 Compounding
periods.
Solve for P.
Monthly Payment = P/24
a. Simple Interest:
P = Po + Po*r*t = 600 + 600*0.015*24
Solve for P.
Monthly payment = P/24
b. Same procedure as "a".