What formula can be used to explain the total cost of a large purchase with regular payments?(1 point)

Question

Responses

FV/(1+r)^n−1/r
Start Fraction upper F upper V upper A over Start Fraction left parenthesis 1 plus r right parenthesis superscript n minus 1 baseline over r End Fraction End Fraction

the number of years⋅12
the number of years times 12

P(1+r)n−1/r
upper A times Start Fraction left parenthesis 1 plus r right parenthesis superscript n baseline minus 1 over r End Fraction

APR/12

Answer 1

The formula that can be used to explain the total cost of a large purchase with regular payments is:

P(1+r)^n - 1/r

This formula calculates the future value of a series of regular payments (P) made at the end of each period, where r is the interest rate per period and n is the total number of periods. This is often used in financial contexts to determine the total amount paid or accumulated over time when regular payments are made.

Please note that this formula is sometimes represented differently or may be derived from various present and future value calculations depending on the financial context, but the essence remains in evaluating the total cost of regular payments.