SOLUTION: can someone show me how the book came to these answers.
Problem#1
Stereo shack sells a stereo system for $600 down and monthly payments of $30 for the next 3 yrs. If the inte
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Problem#1
Stereo shack sells a stereo system for $600 down and monthly payments of $30 for the next 3 yrs. If the inte
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Question 86137: can someone show me how the book came to these answers.
Problem#1
Stereo shack sells a stereo system for $600 down and monthly payments of $30 for the next 3 yrs. If the interest rate is 1.25% per month on the unpaid balance:
a) find the cost of the stereo system
answer: $1465.42
b) Find The total amount of interest paid
answer: $214.58 Answer by stanbon(75887) (Show Source):
You can put this solution on YOUR website! Problem#1
Stereo shack sells a stereo system for $600 down and monthly payments of $30 for the next 3 yrs. If the interest rate is 1.25% per month on the unpaid balance:
a) find the cost of the stereo system
answer: $1465.42
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(loan balance) = (original amt. owed) (1+i)^n-[P/i][(1+i)^n - 1]
You want loan balance to be zero.
Orignal amt owed = (price-600)
i=0.0125
n=36
P=30
Let original price be x dollars
-----------
0 = (x-600)(1.0125)^36 -[30/0.0125][1.0125^36 - 1]
0 = (x-600)(1.563944) - [2400][0.563944]
0 = (x-600)(1.563944)) - 1353.465
x-600 = 1353.465/1.563944
x-600 = 865.418
x = $1465.42
===================
b) Find The total amount of interest paid
answer: $214.58
Amount customer paid = 600+30*36 = 1680
Amount of interest paid = 1680-1465.42 = $214.58
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Cheers,
Stan H.
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