Answered: Sean buys a refrigerator for $899. The…

Sean buys a refrigerator for $899. The dealer gave him a 2-year add-on interest loan at 7.8% interest. Find the size of his monthly payment.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 19PROB

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Question

Sean buys a refrigerator for $899. The dealer gave him a 2-year add-on interest loan at 7.8% interest. Find the size of his monthly payment.

Expert Solution

Step 1

A method of the loan in which the amount of installment is evaluated by combining the principal and interest amount of loan is term as the add-on interest method.

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