what formula did the book use and the set up for it to get this answer for this problem:
Problem:
Stereo shack sells a stereo system for $600 down and monthly payments of $30 for the next 3 yrs. In the interest rate is 1.25% per month on the unpaid balance, find the cost of the stereo system.
Answer:
$1465.42
The amount of loan that gets amortized at $30 a month and 1.25% monthly interest is $865.42. Add the down payment to that and you get the original price.
You will need an amortization table such as http://ray.met.fsu.edu/cgi-bin/amortize
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