Stereo Inc. sells a stereo system for $100 down and monthly payments of $30 for the next 5 years. If the interest is 3.25% per month, find the cost of the stereo and the total interest paid
The total cost of the stereo can be calculated as follows:
Cost of stereo = Down payment + (Monthly payment * Number of months)
Cost of stereo = $100 + ($30 * 60)
Cost of stereo = $100 + $1800
Cost of stereo = $1900
The total interest paid can be calculated by finding the total amount paid over 5 years and subtracting the original cost of the stereo:
Total amount paid = Down payment + (Monthly payment * Number of months)
Total amount paid = $100 + ($30 * 60)
Total amount paid = $100 + $1800
Total amount paid = $1900
Total interest paid = Total amount paid - Cost of stereo
Total interest paid = $1900 - $1900
Total interest paid = $0
Therefore, the cost of the stereo is $1900 and the total interest paid is $0.