Question

If you buy a computer directly from the manufacturer for $2,273 and agree to repay it in 48 equal monthly installments at an annual interest rate of 21.12% on the unpaid balance, how much total interest will be paid on this amortized loan? (Round the amount of the installments to the nearest cent before calculating the final answer.)

Answer 1

hmm okaii let me look over this ;)

Answer 2

@some_someone do you know how to solve this?

Answer 3

I think I have something, but I'm not 100% sure

do you have answer choices?

Answer 4

hmmm choices would be nice?

Answer 5

no answer choices unfortunately

Answer 6

well anyways, I found this formula and calculator that calculates the total cost of a loan (given initial amount borrowed, interest rate, and total life of loan)

http://www.calcunation.com/calculators/business%20and%20finance/vehicle-total-cost.php

The formula is

Loan Total Cost = (c*L*n)/(1 - (1+c)^(-n))

Where

L = loan principal amount (basically the initial balance you need to pay off)
c = monthly interest rate (c = r/12)
n = number of payment periods (ie number of months)


In this case:

L = 2273
c = 0.0176 (c = r/12 = 0.2112/12 = 0.0176)
n = 48 (ie number of months)

Note: n = 48 months = 4 years

Loan Total Cost = (c*L*n)/(1 - (1+c)^(-n))

Loan Total Cost = (0.0176*2273*48)/(1 - (1+0.0176)^(-48))

Loan Total Cost = (0.0176*2273*48)/(1 - (1.0176)^(-48))

Loan Total Cost = (0.0176*2273*48)/(1 - 0.432811988064391)

Loan Total Cost = (0.0176*2273*48)/(0.567188011935609)

Loan Total Cost = (1920.2304)/(0.567188011935609)

Loan Total Cost = 3385.52712608813

Loan Total Cost = 3385.53


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Now use this to find the interest


Interest = Total Cost - Initial Balance

Interest = 3385.53 - 2273

Interest = 1112.53

Answer 7

not 100% sure because I've used that formula before and it's been off by a few cents before, so idk, it's hard to say

Answer 8

ill see if it's correct soon, thanks for the help!

Answer 9

you're welcome

Answer 10

and thx for letting me know