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The manager of Gloria's Boutique has approved Carla's application for 24 months of credit with maximum monthly payments of $70.If the APR is 14.2 percent, what is the maximum initial purchase that Carla can buy on credit?

Respuesta :

Answer:

Maximum initial purchase that Carla can buy on credit is $1455.08

Explanation:

Formula = M = [P (1 + r)^n * r] / [(1 + r)^n - 1]

$70 = P [(1 + 0.142/12)^24 * 0.142/12 ] / [(1 + 0.142/12)^24 - 1]

= $70 = P (1.326209535) * 0.142/12 / 0.326209535

= $70 = P * 0.0156934795 / 0.326209535

= P = $1455.08

So, the maximum initial purchase that Carla can buy on credit = $1455.08

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