MATH

In order to make some home improvements, a home owner spent $24,000. He paid 18% as a down payment and financed the balance of the purchase with a 36-month fixed installment loan with an APR of 4.5%. Determine the home owner's total finance charge and monthly payment

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  1. % Financed = 100% - 18% = 82%.

    Amt. Financed = $24,000 * 0.82 = $19,680.

    Pt = Po*r*t / (1 - (1+r)^-t).

    r = 4.5% / 12 = 0.375% = 0.00375 = Monthly % rate expressed as a decimal.

    Pt=(19680*0.00375*36)/(1-(1.00375)^-36,
    Pt=2656.80 / 0.126063452 = $21,075.10.

    Int.=Pt - Po=21075.10 - 19680=$1395.10

    Monthly Payments=21,075.10 / 36 = $585.42.

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