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25 February, 07:28

Cheryl purchased a pool for $8,960 using a six-month deferred payment plan with an interest rate of 27.35%. She did not make any payments during the deferment period. What will Cheryl's monthly payment be if she must pay off the pool within six years after the deferment period?

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  1. 25 February, 09:27
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    First find the amount at the end of the deferment period using the formula of the future value of a compound interest

    A=8,960 * (1+0.2735:12) ^ (6)

    A=10,257.25

    Use the amount we found as the present value to find the monthly payment by using the formula of the present value of an annuity ordinary to get

    PMT=10,257.25: ((1 - (1+0.2735

    :12) ^ (-12*6)) : (0.2735:12))

    =291.27 ... Answer
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