Question

2. Raul and Josephine buy a plasma TV from Sparky’s Electronics on an installment plan
(simple interest add on loan). They will pay the TV off in 3 years, paying 19.25% interest.
a. If the TV costs $1299.00, what will their monthly payments be?
b. If they make an $800 down payment up front, what will their payments be?

Answer 1

We can use one formula that has to do with the simple interest add on loan which is: S.I = P * R/100 *T. The simbol S.I is Simple Interest, P is he amount that costs the TV, R is the rate percentage of interest and T is the time of the payment. So the operation will go S.I= 1299*19.25/100*3 and the result is 750.125. This will be the Simple interest and now we are adding the real cost of the TV: 750.125 + 1299 = 2049.17. As the year has 12 months and we are talking about 3 years then 12 months * 3 years will be =36. Then we take the total money and we divide it into 36 and it equals 56.92 which is what they need to pay per month. and now if they pay 800 what will remain will be 1299-800=499 so we do the operation again S.I=p*r/100*T but with the new p=499. So 499*19.25/100*3=288.17 and then 288.17+499=21.8659 =$21.87 and that will be the second answer