Question

A school realizes that they need a new copy machine for their main office. The copy machine costs $5,500. After speaking with the financial advisor, they decide to pay 20% of the cost of the machine in cash and finance the rest through their credit union. How much is their monthly payment if the credit union will charge 2% per year compounded monthly for 2 years

Answer 1

Answer:

$187.18

Explanation:

In this question, we use the PMT formula that is shown on the attachment below:

Given that,  

Present value = $5,500 - $5,500 × 20% = $4,400

Future value = $0

Rate of interest = 2%  ÷ 12 months = 0.16666%

NPER = 2 × 12 months = 24

The formula is shown below:

= PMT(Rate;NPER;-PV;FV;type)

The present value come in negative

So, after solving this, the monthly payment is $187.18