Chiara purchased a new natural gas barbecue for $2,100 and made a down payment that was 30% of the purchase price. She financed the remaining balance for 9 months at an annual interest rate of 5.5% compounded monthly. What is Chiara's monthly payment (in dollars) ? (Enter a number. Round your answer to the nearest cent.)

Question

Mathematics

Michelle Carr

21 September, 20:21

Chiara purchased a new natural gas barbecue for $2,100 and made a down payment that was 30% of the purchase price. She financed the remaining balance for 9 months at an annual interest rate of 5.5% compounded monthly. What is Chiara's monthly payment (in dollars) ? (Enter a number. Round your answer to the nearest cent.)

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Answers (1)

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Elyse Brennan · Answer 1

Answer: Chiara's monthly payment is $194.7

Step-by-step explanation:

The cost of the new natural gas barbecue for $2,100. She made a down payment 30% off the purchase price. This means that the amount of down payment made is

30/100 * 2100 = 0.3 * 2100 = $630

Amount left to pay would be

2100 - 630 = $1470

The formula for determining monthly loan payment is

A = P (r (1 + r) ^n) / ((1 + r) ^n - 1)

There would be 9 monthly payments, so

n = 9

r = 0.055/12 = 0.0046

P = 1470

A = 1470 (0.0046 (1 + 0.0046) ^9) / ((1 + 0.0046) ^9 - 1)

A = (1470 * 0.0049) / 0.037

A = 7.203/0.037

A = 194.67