Suppose you buy an appliance costing 1550 at a store changin

Suppose you buy an appliance costing $1550 at a store changing 12% add-on interest, you make a down payment of $600, and you agree to monthly payments over 3 years. Find the total amount that will be financed. The total amount that will be financed is $

Solution

cost of appliance = $ 1550

add on interest = 12%

down payment = $ 600

monthly payment for 3 years

applying compound interest formula

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

P = 1550 - 600 = 950

r = .12

n = 12

t = 3

A = 950 ( 1 + .12 / 12 )^3*12

A = $ 1359.23

total amount that will be financed is $ 1359.23