Compound Monthly Interest question

This is a question from a text book. plz help and solve it.

The Huang family purshased a motor home by borrowing $30,000 at 9%/a compounded monthly. The Huang will make payments at the end of each month. They have two choices for the term: 5 years and 8 years

a) Determine the monthly payments for each term.

b) How much money would they save by choosing the shorter term.

I tried to do find the total amount after 5 years which is $46,970.43 and 8 year is $61,467.64. As I subtracted the 5 year total from 30,000 and divide by 5x12 months, I got $282.84 for a) but the book says its $622.75 so apparantly im wrong. The book also says for 8 year term it is 439.51 and b) is $4827.96.

Help asap!!?? any answer is welcome!

Re: Compound Monthly Interest question

Quote:

Originally Posted by

**Macmade** This is a question from a text book. plz help and solve it.

The Huang family purshased a motor home by borrowing $30,000 at 9%/a compounded monthly. The Huang will make payments at the end of each month. They have two choices for the term: 5 years and 8 years

a) Determine the monthly payments for each term.

b) How much money would they save by choosing the shorter term.

I tried to do find the total amount after 5 years which is $46,970.43 and 8 year is $61,467.64. As I subtracted the 5 year total from 30,000 and divide by 5x12 months, I got $282.84 for a) but the book says its $622.75 so apparantly im wrong. The book also says for 8 year term it is 439.51 and b) is $4827.96.

Help asap!!?? any answer is welcome!

your text should have a formula for calculating payments ...

$\displaystyle P = A \cdot \frac{r(1+r)^n}{(1+r)^n - 1}$

$\displaystyle P$ = monthly payment

$\displaystyle A$ = amount financed

$\displaystyle r$ = monthly interest

$\displaystyle n$ = total number of monthly payments

... plug and chug on a calculator.

Re: Compound Monthly Interest question

so to simplify that P=A*r/-1? i plug the values in the equation you gave me and it gave me an extravagant number. World Transit Facility, sorry the book is more like a question book with answers.

Re: Compound Monthly Interest question

Quote:

Originally Posted by

**Macmade** so to simplify that P=A*r/-1? i plug the values in the equation you gave me and it gave me an extravagant number. wtf. sorry the book is more like a question book with answers.

you cannot cancel the $\displaystyle (1 + r)^n$ in the formula ... review your basic algebra.

$\displaystyle A = 30000$

$\displaystyle r = \frac{.09}{12}$

for 5 years, $\displaystyle n = 60$

Re: Compound Monthly Interest question

oh yeah true. i often forget that yu cant cancel out if multiplication is present. thanks anywayz

Re: Compound Monthly Interest question

Quote:

Originally Posted by

**Macmade** I tried to do find the total amount after 5 years which is $46,970.43 and 8 year is $61,467.64.

Those are the FV's of $30,000 after 5 and 8 years: has NOTHING to do with the problem.

IF as you say this is "a question from a text book", WHY do you need answer "asap"?

Re: Compound Monthly Interest question

^because its homework and students are expected to do it? b) requires the subtraction of term 1 and term 2. I also tried to solve a) by dividing the answer by 60 months. Do you understand?

Re: Compound Monthly Interest question

I will not do your homework.

Perhaps someone else will, but I doubt it.