00:01
In this question, we have been given that thomas magnum has misplaced the sales contract for his car and cannot remember the amount he originally financed.
00:09
He does know the add -on interest rate was 9 .8 % and the loan required a total of 48 monthly payments.
00:20
Okay, so monthly payment is given to be $314 .65.
00:31
Correct? so, this is the monthly payment.
00:34
How much did thomas borrow? okay, so that is what we need to find out.
00:39
And payment is for 48 months.
00:43
So, let us calculate how much amount did thomas borrow.
00:48
So, we know this relation p is equals to r times 1 minus 1 plus i raised to minus n over i.
01:02
Where, let me write what all these terms mean.
01:08
It denotes the principle of loan that is the borrowed amount.
01:12
Okay, then r here, it denotes the payment size.
01:19
Payment size.
01:23
Then we have n, it says the number of conversion periods.
01:30
Conversion period.
01:34
Then we have r, nominal interest rate.
01:39
Nominal interest rate...