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Mark borrowed $22875 to buy a new car. The loan is to be repaid with monthly...

Mark borrowed $22875 to buy a new car. The loan is to be repaid with monthly repayments. Interest is charged monthly at 8.2% p/a. How much will each repayment be if the first is made RIGHT AWAY, on the day the car is delivered?

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Answer #1

PVA(due) = Annuity + Annuity[{1 - (1 + r)-(n - 1)} / r]

$22,875 = Annuity + Annuity[{1 - (1 + 0.082/12)-(12 - 1)} / (0.082/12)]

$22,875 = Annuity + Annuity[0.0722 / 0.0068]

$22,875 = Annuity + Annuity[10.5620]

$22,875 = Annuity[11.5620]

Annuity = $22,875/11.5620 = $1,978.46

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