Pharmacy for the homeless is going to purchase a new drug storage unit for $16,000. A bank will lend the organization the case at an annual interest rate of 12%. Pharmacy will have to repay the loan in equal installments over two years. How much will they have to pay each month?
The full sum to repay in two years will be: FV = PV*(1+r)^2 = 16,000*1.12^2 = $23,030, FV - future value, PV - present value, r - interest rate. So, the monthly installment amount will be: MI = FV/24 = 23,030/24 = $960 they have to pay each month