Felix purchased a boat for $9,755. He made a down payment of $875. He applied for a six-year installment loan with an interest rate of 10.4% in the amount of $8,880. What is the total cost of the boat after six years?

$9,803.52

$11,974.32

$12,849.32

$10,769.52

Need some major help understanding this! Please Help!

Question

Felix purchased a boat for $9,755. He made a down payment of $875. He applied for a six-year installment loan with an interest rate of 10.4% in the amount of $8,880. What is the total cost of the boat after six years?

 $9,803.52

 $11,974.32

 $12,849.32

 $10,769.52

Need some major help understanding this! Please Help!

math&ing001 · Answer

The bank is taking an interest rate of 10.4% from the loan you took wich is $8880.
So the total cost would be the amount $8880 plus the interest the bank is taking ie (10.4*8880)/100
Total cost  =  8880+0.104*8880  =  $9803.52

anonymous · Answer

Thank you I thought it was that answer but its wrong

math&ing001 · Answer

Yeah sry just googled it, apparently installment loan is different than the normal one. cf http://en.wikipedia.org/wiki/Installment_loan

anonymous · Answer

Yes its okay you have to use this formula   M= P  ( i(+1)^nt / (1+i)^nt  -1)    but I keep doing something wrong

anonymous · Answer

I got the answer is 12849

math&ing001 · Answer

Gratz !