A certain company has purchased new swivel chairs for its employees. The company made the purchase on a credit plan at Buy Right. Their monthly payments are $1,000 for 2 years. Buy Right will charge 3.45% per year compounded monthly. How much was the original total price of the furniture?

Original price = $23,158.58

Explanation:

Giving the following information:

The company purchased a credit plan at Buy Right. Their monthly payments are $1,000 for 2 years. Buy Right will charge 3.45% per year compounded monthly.

First, we need to calculate the final value, using the following formula:

FV = {A*[ (1+i) ^n-1]}/i

A = monthly pay = 1,000

i = 0.0345/12 = 0.002875

n = 12*2 = 24

FV = {1,000*[ (1.002875^24) - 1]} / 0.002875

FV = $24,810.48

Now, we can calculate the original price:

PV = FV / (1+i) ^n

PV = 24,810.48 / (1.002875^24)

PV = $23,158.58