On December 31, Beth Klemkosky bought a yacht for $110,000 and paid $14,000 down
ID: 2703856 • Letter: O
Question
On December 31, Beth Klemkosky bought a yacht for $110,000 and paid $14,000 down and agreed to pay the balalnce in 9 equal annual installments that include both the principal and 8 percent interest on the declining balance. How big will the annual payments be? how much does she need to borrow to purchase the yacht? (please show work on how you got to the answer)
On December 31, Beth Klemkosky bought a yacht for $110,000 and paid $14,000 down and agreed to pay the balalnce in 9 equal annual installments that include both the principal and 8 percent interest on the declining balance. How big will the annual payments be? how much does she need to borrow to purchase the yacht? (please show work on how you got to the answer)Explanation / Answer
PV = 96,000 (110,000-14,000)
use the formula as above PV = PMT * 1- 1/(1+i)^n / i
96,000 = =PMT * 1- 1/(1 + .08)^9 / .08
96,000 =PMT * 1- 1/1.08^9 / .08
96,000 =PMT * 1-1/1.999 /.08
96,000 = PMT * 1-.50/.08
96,000 = PMT* .50/.08
96,000 = PMT * 6.25
96,000 /6.25 = PMT
15,360 = PMT
she needs to borrow 15,360 * 9 to cover pmts of principal + int ($138,240)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.