4. a) Determine the monthly payment if the furniture bill is not paid by the due date Payments and compounding of interest are monthly. [A 2] b) Determine how much Jane and Bill will pay for the furniture, including interest. [A 1] c)What is the total interest paid? [A 1] N __ 1% __ PV __ PMT __ FV __ P/Y __ C/Y __ PMT: END BEGIN __

## Step 1: Convert Annual Interest Rate to Monthly and Calculate Number of Payments<br />### The annual interest rate is 18%, so the monthly interest rate is $\frac{18\%}{12} = 1.5\% = 0.015$. The loan term is 2 years, which is equivalent to $2 \times 12 = 24$ months.<br /><br />## Step 2: Calculate the Monthly Payment<br />### We are given that the present value (PV) of the loan is $3500. We need to find the monthly payment (PMT). The future value (FV) is 0 since the loan will be paid off. Using the formula for monthly payments:<br />$PMT = \frac{PV \times i}{1 - (1 + i)^{-n}}$, where $i$ is the monthly interest rate and $n$ is the number of months.<br />$PMT = \frac{3500 \times 0.015}{1 - (1 + 0.015)^{-24}} = \frac{52.5}{1 - (1.015)^{-24}} \approx \frac{52.5}{1 - 0.70} \approx \frac{52.5}{0.30} \approx 175$<br /><br />## Step 3: Calculate the Total Amount Paid<br />### The total amount paid is the monthly payment multiplied by the number of payments: $175 \times 24 = 4200$.<br /><br />## Step 4: Calculate the Total Interest Paid<br />### The total interest paid is the difference between the total amount paid and the original principal: $4200 - 3500 = 700$.