Ask Question
24 October, 01:19

You borrow $20,000 to buy a boat. The loan is to be paid off in monthly installments over one year at 18% interest annually. The first payment is due one month from today. What is the amount of each monthly payment

+3
Answers (1)
  1. 24 October, 01:28
    0
    Monthly payment = $1,833.599

    Explanation:

    Loan amortization is a method of loan repayment where a series of equal amount is used to offset the principal and the interest due on a loan contract.

    The monthly equal amount = loan amount/annuity factor

    Annuity factor = 1 - (1+r) ^ (-n)) / r

    r - monthly interest rate = 18%/12 = 1.5%

    n - number of months = 12 months

    Annuity factor = (1 - (1.015) ^ (-12)) / 0.05

    = 10.9075

    Monthly payment = 20,000/10.90750521

    =1,833.599

    Monthly payment = $1,833.599
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “You borrow $20,000 to buy a boat. The loan is to be paid off in monthly installments over one year at 18% interest annually. The first ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers