Question

Joe Football buys a big screen TV. The price, including tax, amounts to $1,950.00. Joe finances the TV over 24 months after making a $200 down payment. The true annual interest rate is 16%. What are Joe's monthly payments (principal plus interest)?

Answer 1

Amount financed
1,950−200=1,750

Total interest
(0.16×1,750×25)÷(2×12)=291.67

Total paid
291.67+1,750=2,041.67

Monthly payments
2,041.67÷24=85.07

Answer 2

Answer:

Joe's monthly payment = $85.69

Step-by-step explanation:

Joe Buys a big screen TV. The price including tax $1,950

Down payment = $200

Amount to be financed = 1950-200 = $1,750

Rate of interest = 16% annual

Period of payment = 24

Formula:

$P=\dfrac{r\cdot PV}{1-(1+r)^{-n}}$

Where, PV=$1,750 , r=0.0133 , n=24

Substitute into formula and solve for P

$P=\dfrac{0.0133\times 1750}{1-(1+0.0133)^{-24}}$

$P=\dfrac{23.33}{0.2723}\Rightarrow 85.69$

Monthly Payment = $85.69

Thus, Joe's monthly payment = $85.69