1) Her monthly payment is $40.97 if she finance the total amount
2) She will pay $2458.2 for the MPC5000
3)Her monthly payment will be $26.50 if she pay her saved up money upfront
4) She will pay $2365.4 for the MPC5000
5) Yes, I recommend to pay the $775 upfront . If she pay upfront, then the amount she needs to pay for the MPC5000 is less.
Step-by-step explanation:
The cost of the drum machine is $2195
The APR is 12% over 60 months
1) the APR for 60 months is 12%
So, the APR for 1 month is
12/60 = 0.2%
The interest per month = 0.2% of 2195
= (0.2 x 2195) / 100
= 4.39
The amount to be paid per month is
= monthly amount + interest
= (2195/60) + 4.39
= 36.58 + 4.39
=$ 40.97
2) If she pays $40.97 per month then the total payment (for 60 months) for the drum machine
= 40.97 x 60
= $ 2458.2
3) the total cost is $2195 out of which she pays $775 upfront.
So she have to borrow less .
The amount to be financed is
2195- 775= $1420
The monthly interest is,
(0.2 x 1420) /100 = 2.84
Monthly she have to pay
23.66+ 2.84= $26.50
4) If she pay $775 upfront then the remaining $1420 is financed
Her monthly payment is $26.50
Then for 60 months she will pay,
26.50 x 60= $1590.4
The total amount paid for the drum machine is
775+1590.4 =$2365.4
=7.2 pounds