College Algebra 7th Edition

Published by Brooks Cole
ISBN 10: 1305115546
ISBN 13: 978-1-30511-554-5

Chapter 8, Sequences and Series - Section 8.4 - Mathematics of Finance - 8.4 Exercises: 17

Answer

Monthly payment: $\$733.76$ Total paid: $\$264,153.60$

Work Step by Step

We are given: $A_{p}=100000, i= \frac{0.08}{12}=0.006\bar6, n=12*30=360$ The present value of an annuity is given by: $A_{p}=R \frac{1-(1+i)^{-n}}{i}$ We solve for $R$: $R=\frac{iA_{p}}{1-(1+i)^{-n}}:$ $R=\frac{(0.006\bar6)(100000)}{1-(1+0.006\bar6)^{-360}}={{\$}} 733.76$ Since the montly payment is $\$733.76$ and we pay over 30 years ($12*30=360$ payments), the total amount paid is: $360*733.76=\$264,153.60$
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