Hello, sissylove!

Amount of purchases: $15,000. .Down payment: $2,000

Rate of interest: 8%. .Term of loan: 5 yrs.

Find the Monthly payment.

I did the problem by: .A .= .13000(1 + .08/12)^(12*5) .= .$19,367.99

Monthly payment: .$19,367.99 ÷ 60 .= .$322.80

My friend said i did the problem wrong and she got $263.64 . She's right

. . and wont explain how. . She's mean!

What you found is the total amount we'd owe if we madenopayments.

They would charge us interest on theentire$13,000 for theentire five years.

Then we would pay them $19,367.99 at the very end.

The problem is an "Amortization", like car loans and home mortgages.

And this requires a special formula . . . and you're expected to know it.

. . . . . . . . . i(1 + i)^n

. . A .= .P·----------------

. . . . . . . .(1 + i)^n - 1

wherePis the amount of the loan,iis the periodic interest rate

. . andnis the number of periods.

We have: .P = 13000, . i = 0.08/12, .n = 60

. . . . . . . . . . . . . . . (0.08/12)(1 + 0.08/12)^60

Then: . A .= .13,000·--------------------------------- . = . 263.5931259

. . . . . . . . . . . . . . . . . (1 + 0.08/12)^60 - 1

Therefore, the monthly payment is $263.59