Jean purchased a $995 stereo system on the installment plan. She paid

20% down. The finance charge on the remainder was 19.4%. She was
given 18 months to pay off the balance. What was her monthly payment?

1 answer

The original unpaid balance was
P = 0.8 x 995 = $796.00

A finance charge of 19.4% is 19.4%/12 = i = 1.61667% per month. The number of payments is n = 18

The formula you need to use can be found at
http://en.wikipedia.org/wiki/Amortization_calculator

It is
A = P i /[1 - (1+i)^-n]

In your case,

A = 796*.0161667/[1 - 0.74929] = $51.32