Answer:
(a). $1465.42
(b). $214.58
Step-by-step explanation:
We have been given that installment Buying TV Town sells a big screen smart HDTV for $600 down and monthly payments of $30 for the next 3 years. The interest rate is 1.25% per month on the unpaid balance.
(a) To find the cost of the TV, we will use monthly payment formula.
, where,
R = Periodic payment,
P = Loan amount,
i = Monthly interest rate in decimal form,
n = Number of total payments.
We know that total cost of TV would be equal to down payment plus amount of loan that is:
Therefore, the total cost of the TV would be $1465.42.
(b). First of all, we need to find total amount paid in 3 years by multiplying amount of each monthly payment by 36 (3 years equal to 36 months).
To find the total amount of interest paid, we will subtract amount of loan from total payment.
Therefore, the total amount paid in interest would be $214.58.