Asked by Kris

Stereo Inc. sells a stereo system for $300 down and monthly payments of $40 for the next 2 years. If the interest rate is 3.25% per month, find:
a) The cost of the stereo.
b) The total amount of interest paid.

I am having trouble figuring out the correct layout.
Answered by Reiny
cost = 300 + 40(1 - 1.0325^-24)/.0325
= $ 959.53

interest paid = 300 + 24(40) - 959.53 = $300.47

Wow, that is 39% . Is that even legal?
In the middle ages they would have burned you at the stake for usury.
Answered by Kris
Thank you so much for this. And I really like the way you lay out the way it is solved. easy to understand.
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