Question

PLEASE HELP

Flint purchased a boat for $10,815. He made a down payment of $1,175. He applied for a six-year installment loan with an interest rate of 9.4% in the amount of $9,640. What is the total cost of the boat after six years?

$12,649.68

$13,824.68

$11,831.61

$10,546.16

Answer 1

assuming monthly compounding, interest rate = 9.4/1200 = 47/6000
discount rate = 1/(1 +47/6000) = 6000/6047 = D(say)
period = 12*6 = 72
let monthly payments be R, then
9640 = RD + RD^2 + RD^3 + ..... RD^72,
a GP with a = RD, r = D, sum = RD(1-D^72)/(1-D)
plugging in, R = 9640*(47/6047)/((6000/6047)*(1- (6000/6047)^72))
= $175.69
so total amount paid = 72*175.69 + 1175 = $13,824.68 [ B ] <-----

Answer 2

$13,824.68

Answer 3

thanks, both of you!