MATH QUESTION, ( MONTHLY COMPOUND INTEREST)

hi! I need help please, I don't understand what I am doing wrong :(

"Suppose you buy an appliance costing $2550 at a store charging 14% add-on interest, you make a down payment of $600, and you agree to monthly payments over 3 years."

a.) Find the total amount to be repaid
b.) find the total cost for appliance plus interest



I know I am supposed to use the monthly compound formula, as well as the P(1+rt) but I am always wrong !

thank you, thank you thank you I will appreciate forever!

Louise

The formula for compounded interest is:

A = P(1 + r/n)^(nt)

where:

A = the final amount, after 't' years
P = principal (starting) amount
r = interest rate
n = number of times interest is compounded per year
t = time, in years

So, we know:

P = (2550 - 600) = 1950
r = 0.14
n = 12 (since you said compounded monthly)
t = 3

So:

A = 1950(1 + 0.14/12)^(12*3)

A = 1950(1.011666667)^(36)

A = 1950(1.5182659942)

A = 2960.618689


So, to answer your questions:

a) The total amount to be REPAID is $2960.62

b) The total cost of the appliance (including interest and down payment) is (2960.62 + 600) = $3560.62