Answer: the monthly payment is $192
Step-by-step explanation:
The cost of the new home entertainment system is $14230.
If the down payment is $2300, then the balance to be paid would be
14230 - 2300 = $11930
We would apply the periodic interest rate formula which is expressed as
P = a/[{(1+r)^n]-1}/{r(1+r)^n}]
Where
P represents the monthly payments.
a represents the amount of the balance
r represents the annual rate.
n represents number of monthly payments. Therefore
a = $11930
r = 0.05/12 = 0.0042
n = 72 months
Therefore,
P = 11930/[{(1+0.0042)^72]-1}/{0.0042(1 + 0.0042)^72}]
11930/[{(1.0042)^72]-1}/{0.0042(1.0042)^72}]
P = 11930/{1.352 -1}/[0.0042(1.352)]
P = 11930/(0.353/0.0056784)
P = 11930/62.125
P = $192
