The Giordanos buy $7300 worth of furniture for their new home. They pay $1000 down. The store charged 10% add-on interest. The Giordanos will pay off the furniture in 18 monthly payments (1 1/2 years). Find the monthly payment.

Answer: the monthly payment is $379.1

Step-by-step explanation:

The balance to be paid would be

7300 - 1000 = $6300

We would apply the periodic interest rate formula which is expressed as

P = a/[{ (1+r) ^n]-1}/{r (1+r) ^n}]

Where

P represents the monthly payments.

a represents the amount to be paid

r represents the annual rate.

n represents number of monthly payments. Therefore

a = $6300

r = 0.1/12 = 0.0083

n = 12 * 1.5 = 18

Therefore,

P = 6300/[{ (1+0.0083) ^18]-1}/{0.0083 (1+0.0083) ^18}]

6300/[{ (1.0083) ^18]-1}/{0.0083 (1.0083) ^36}]

P = 6300/{1.16 - 1}/[0.0083 (1.16) ]

P = 6300 / (0.16/0.009628)

P = 6300/16.618

P = $379.1