The cost of the stereo

Question

Stereo Inc. sells a stereo system for $400 down and monthly payments of $40 for the next 2 years. If the interest rate is 3% per month, find: a) The cost of the stereo

Answer 1

The cost of the stereo is the down payment plus the present value of 24 payments discounted at 3%

 

Present Value of Annuity = PMT * (1/.03)*(1-(1+.03)^-24) = 677.42

 

Cost of Stereo = $400 + $677.42 = 

 

Can you calculate the final cost?