Ask Question
17 October, 18:19

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. 17 October, 19:07
    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 you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers