Answer:
London's monthly payment $100.
Finance charge $500.
Step-by-step explanation:
The formula of per month payment:
[tex]PV=PMT(\frac{1-(1+\frac rn)^{-t}}{\frac rn})[/tex]
[tex]I[/tex]= (PMT×t)-PV
PV= present value
PMT=Monthly payment
r= rate of interest
t=time
n= Number of interest per month
Landon Wallin needs $4300 to purchases a tool and equipment. He decides to finance the purchase with a monthly installment for 48 months.
Here,
PV=$4300, r=5.5%=0.055, t=48 months, n=12
[tex]4300=PMT(\frac{1-(1+\frac{0.055}{12})^{-48}}{\frac{0.055}{12}})[/tex]
[tex]\Rightarrow 4300= PMT\{\frac {(1-(1+\frac{0.055}{12})^{-48}).12}{0.055}\}[/tex]
[tex]\Rightarrow PMT=\frac{4300\times 0.055}{(1-(1+\frac{0.055}{12})^{-48}).12}[/tex]
[tex]\Rightarrow PMT=\frac{236.5}{(1-(1.0046)^{-48}).12}[/tex]
[tex]\Rightarrow PMT\approx100[/tex]
London's monthly payment $100
[tex]I[/tex]= (100×48)-4300
=4800-4300
=$500
Finance charge $500.
