SOLUTION: 2. You buy a ship for $ 35,000 and pay a down payment of $ 5,000 and promise the balance will be paid in 10 years with 10 payments of the same amount, consisting of the principal p

Question 1187021: 2. You buy a ship for $ 35,000 and pay a down payment of $ 5,000 and promise the balance will be paid in 10 years with 10 payments of the same amount, consisting of the principal plus compound interest of 13 percent of the outstanding amount. How much will each payment be paid?
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
cost is 35000
down payment is 5000
loan amount is 3000
balance will be payments made at the end of each year for 10 years.
interest rate is 13% compounded annually.

use the calculator at https://arachnoid.com/finance/index.html

inputs are:

pv = -30000
fv = 0
np = 10
ir - 13%
payment at end of time period

inputs look like this:

output looks like this:

solution is that payments of 5528.69 is made at the end of each year for 10 years.

remaining balance at the end of each year is shown below:

remaining balance from the previous year is multiplied by 1.13 and then the payment of 5528.69 is subtracted to get the remaining balance from the current year.

example:
end of year 0 remaining balance = 30,000
multiply that by 1.13 and subtract 5528.69 from that to get:
end of year 1 remaining balance = 28,371.31.

eoy = end of year
rembal = remaining balance

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