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You decided to take advantage of the Black Friday deals and buy kitchen cabinets at Home...

You decided to take advantage of the Black Friday deals and buy kitchen cabinets at Home Depot. You will be paying for the cabinets with a Home Depot consumer loan in the amount $7,230. To pay off the loan you will be required to make monthly payments for 5 years. The loan interest rate is 6 percent per year. Calculate the amount of each payment.

  • $134.60

  • $103.63

  • $103.08

  • $139.78

  • $133.12
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Answer #1

Loan amount = Present value of future monthly payments = monthly payment * [1-(1+i)^-n]/i

i = interest rate per period

n = number of periods

Loan amount = 7230

=>

monthly payment * [1-(1+0.06/12)^-60]/(0.06/12) = 7230

=>

monthly payment = 139.78

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