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22 October, 10:23

A sailboat cost $35000. you pay 20% down and amortize the rest with equal monthly payments over a 12 year period. if you must pay 8.75% compounded monthly. what is your monthly payment

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  1. 22 October, 10:26
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    Total cost = $35,000

    Down payment = 20% of $35,000 = $7,000

    P = 35,000 - $7,000 = $28,000, the amount of the loan.

    r = 8.75% = 0.0875, the interest rate

    n = 12, compoundings per year

    t = 12, the nmber of years

    Note that

    1 + r/n = 1.007292

    nt = 144

    The value of the loan is

    A = P*1.007292¹⁴⁴ = $79,709.99

    Monthly payment = $79,709.99/144 = $553.54

    Answer: $553.54
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