Explanation Given: 8 laptop computers are bought with a down payment of $1,200. Cost of each laptop is $1,048. Rate of interest is 6% compounded monthly and the loan is for 4 years. Explanation: Cost of one laptop computer is $1,048. So, the cost of 8 laptop computers will be as follows: 8 × $ 1,048 = $ 8,384 A down payment of $1200 is made, so the principal of the loan will be as follows: $ 8,384 − $ 1,200 = $ 7,184 Use the formula for the Amortization payments: R = P i 1 − ( 1 + i ) − n Here, P is the principal of loan, R is the periodic payment, i is the interest rate per period, and n is the number of periods. As monthly payments are made for 4 years: n = 12 × 4 = 48 The interest rate per period will be as follows: i = 1 12 × 6 % = 0.005 Substitute P = $ 7 , 184 , i = 0.005 , and n = 48 to obtainthe value of each monthly payment as follows: R = P i 1 − ( 1 + i ) − n = 7 , 184 × 0.005 1 − ( 1 + 0.005 ) − 48 = 7 , 184 × 0.005 1 − 1.005 − 48 = 7 , 184 × 0.005 1 − 0.787098 Simplify further: R = 7 , 184 × 0

11th Edition

ISBN: 9780321979438

Author: Margaret L. Lial, Raymond N. Greenwell, Nathan P. Ritchey

Publisher: PEARSON

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Chapter 5.3, Problem 46E

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An amortization schedule for a loan to buy 8 laptop computers at an interest of 6% compounded monthly for 4 years.

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Chapter 5.3, Problem 45E

Chapter 5.3, Problem 47E

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Chapter 5 Solutions

Finite Mathematics (11th Edition)

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