An installment contract for the purchase of a car requires payments of $ 233.79 at the end of each month for 2 years . Interest is 11 % per annum compounded monthly ( a ) What is the amount financed ? ( b ) How much is the interest cost ? ( a ) The amount financed is $ ( Round the final answer to the nearest cent as needed . Round all intermediate values to six decimal places as needed . ) ( b ) The interest is ( Round the final answer to the nearest cent as needed . Round all intermediate values to six decimal places as needed . )
Added by Geoffrey F.
Step 1
We can use the formula for the present value of an annuity: PV = PMT x [1 - (1 + r)^(-n)] / r where PV is the present value, PMT is the payment amount, r is the monthly interest rate (11% / 12 = 0.0091667), and n is the number of payments (2 years x 12 Show more…
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