A new machine is offered at $12000 but can be acquired through installment at interest rate of 3.5% per month, compunded monthly. How much will u oay for intallment evert month for two years?

Question

retireed · Answer

I think you mean 3.5% annual interest rate compounded monthly.  It makes no sense to say 3.5% per month, compounded monthly.

colors · Answer

Ok can you please help to det. The how much will u pay for intallment every month for two years? @retirEEd

retireed · Answer

I learned this in college, so I will treat you like a college student. That means I will explain on a higher level than I would to a high school student. There is a fairly simple equation to calculate the payment. It is basically a loan repayment calculation like a car payment, but in this question we are just buying a new machine for $12,000. A simple Google search for "Loan Payment Formula" will find something like this equation....

$$Payment = r(PV)/(1-(1+r)^{-n})$$

PV is the present value, (the loan amount, the cost of the new machine) 

r is the rate per annual period (the interest rate in decimal form divided number of periods per year 

n is the total number of periods to pay back the loan For your question;

For your problem:
 PV = 12000 
r = (0.035/12) = 0.002917 
n = 24 be sure to use -24 like shown in the equation 

If you enter the information correctly your payment answer will be between $500 and $550