A sailboat costs $35,000.You pay 20% down and amortize the rest with equal monthly payments over a 12-year period. If you must pay 8.75% compounded monthly, what is your monthly payment? How much interest will you pay?

Question

mathmate · Answer

20% down means 35000*0.2=7000 down.
What's left to be amortized is 
P=35000-7000=28000  (present value)
Let 
A=monthly payment,
n=number of months (144)
i=monthly interest=8.75%/12=0.0875/12
R=monthly compounding factor = 1+i
Then 
$A=P(R^n)i/(R^n-1)$
Take out your calculator and find A.