The formula that can be used to explain the total cost of a large purchase with regular payments is the present value of an annuity formula. This formula is given by:
PV = Pmt x [(1 - (1 + r)^-n) / r]
Where:
PV = Present value of the total cost of the purchase
Pmt = Regular payment amount
r = Interest rate
n = Number of payment periods
By using this formula, you can calculate the total cost of the purchase over the term of the payments, taking into account the interest rate and the regular payment amounts.
what formula can be used to explain the total cost of a large purchase with regular payments
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