Question

Katie's Dinor spent $113,800 to refurbish its current facility. The firm borrowed 65 percent of the refurbishment cost at 6.82 percent interest for six years. What is the amount of each monthly payment?

Answer 1

Answer:

The amount of each monthly payment is $1,254.72.

Explanation:

Amount Borrowed = 65% ×$113,800 = $73,970

Annual Interest = 6.82%

Monthly Interest Rate = 6.82% / 12 = 0.5683%  

Number of Payments = 12 * 6 = 72

Let $X be the monthly payment.

$73,970 = $X×PVIFA(0.5683%, 72)

73,970 = X×(1-(1/1.005683)^72)/0.005683

73,970 = X×58.9535

X = $1,254.72

Therefore, the amount of each monthly payment is $1,254.72.