Ken just purchased new furniture for his house at a cost of $15,000. The loan calls for weekly payments for the next 5 years at an annual interest rate of 10.15 percent. How much are his weekly payments

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Business

James Willis

2 December, 02:11

Ken just purchased new furniture for his house at a cost of $15,000. The loan calls for weekly payments for the next 5 years at an annual interest rate of 10.15 percent. How much are his weekly payments

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Ally Gordon · Answer 1

His Weekly Payment is $73.62

Explanation:

Loan is paid in installment over the allowed period of the loan. It includes the principal payment and interest payment as well. Ultimately after a defined period the loan becomes zero. The loan installment amount is calculated as below.

Loan Payment per year = r (PV) / 1 - (1 + r) ^-n

r = rate per period = 10.15% per year = 10.15%/52 = 0.1952% per week

n = number of Years = 5 years x 52 = 260 weeks

PV = Loan amount = $15,000

P = payment per year = ?

P = 0.1952% ($15,000) / 1 - (1 + 0.1952%) ^-260

P = $29.28 / 0.3977

P = $73.62