Question

Please answer quickly!!! A sailboat costs $28,035. You pay 10% down and amortize the rest with equal monthly payments over a 12-year period. If you must pay 8.4% compounded monthly, what is your monthly payment? How much interest will you pay?

Monthly payments: $____

Interest: $____

Please do not round any numbers.

(Please square, label, or circle the answer)

Answer 1

Cost of Sailboat = $28,035

Down Payment = 10% * $28,035
Down Payment = $2,803.50

Amount Borrowed = $28,035.00 - $2,803.50
Amount Borrowed = $25,231.50

Annual Interest Rate = 8.40%
Monthly Interest Rate = 8.40% / 12
Monthly Interest Rate = 0.70%

Time Period = 12 years or 144 months

Let Monthly Payment be $x

$25,231.50 = $x/1.007 + $x/1.007^2 + … + $x/1.007^143 + $x/1.007^144
$25,231.50 = $x * (1 - (1/1.007)^144) / 0.007
$25,231.50 = $x * 90.538292
$x = $278.68

Monthly Payments = $278.68

Total Amount Paid = 144 * $278.68
Total Amount Paid = $40,129.92

Total Interest Paid = Total Amount Paid - Amount Borrowed
Total Interest Paid = $40,129.92 - $25,231.50
Total Interest Paid = $14,898.42