On January 1, Frank bought a used car for $7200 and agreed to pay for it as follows: down payment; the balance to be paid in 36 equal monthly payments; the first payment due February 1; an annual interest rate of 9%, compounded monthly. (a) What is the amount of Frank’s monthly payment? (b) During the summer, Frank made enough money to pay off the entire balance due on the car as of October 1. How much did Frank owe on October 1?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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On January 1, Frank bought a used car for $7200 and agreed to pay for it as follows: down payment; the balance to be paid in 36 equal monthly payments; the first payment due February 1; an annual interest rate of 9%, compounded monthly.

(a) What is the amount of Frank’s monthly payment?

(b) During the summer, Frank made enough money to pay off the entire balance due on the car as of October 1. How much did Frank owe on October 1?

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