Question

Chiara purchased a new natural gas barbecue for $2,100 and made a down payment that was 30% of the purchase price. She financed the remaining balance for 9 months at an annual interest rate of 5.5% compounded monthly. What is Chiara's monthly payment (in dollars)? (Enter a number. Round your answer to the nearest cent.)

Answer 1

Answer: Chiara's monthly payment is $194.7

Step-by-step explanation:

The cost of the new natural gas barbecue for $2,100. She made a down payment 30% off the purchase price. This means that the amount of down payment made is

30/100 × 2100 = 0.3 × 2100 = $630

Amount left to pay would be

2100 - 630 = $1470

The formula for determining monthly loan payment is

A = P(r(1 + r)^n)/((1 + r)^n - 1)

There would be 9 monthly payments, so

n = 9

r = 0.055/12 = 0.0046

P = 1470

A = 1470(0.0046(1 + 0.0046)^9)/((1 + 0.0046)^9 - 1)

A = (1470 × 0.0049)/0.037

A = 7.203/0.037

A = 194.67