What am I doing wrong here?

Question

Hey I have a problem

I know this equation for present value of annuity: A=R(1-(1+i)^-n / i (all except r divided by I)

For my problem I need to find the amount of money I will pay per payment (R) for 24 monthly payments. My annual interest rate is 4.29% and I make monthly payments so I divided it by 12 to get .3575 or .003575 percent interest rate per month. My A is 8418$

So I get the equation:

8418 = R(1-1+.003575)^-24) / i

However, I get a negative number which I know cannot be right. I do not know where my mistake is, maybe I made the wrong interest rate? Help appreciated

Thank you

Answer 1

The problem is that you got the formula wrong. It should be:

A=R(1+i/n)^n - 1/ i where A=8418, i=.0429/24, n=24

8418 = R (1+.0429/24)^24 - 1 / (.0429/24)

8418 = R(1.0017875)^24 - 1 / .0017875

8418 = R (1.04379 - 1) / .0017875

8418 = R (.04379) / .0017875

8418 = R * 24.498

R = 8418 / 24.498

R = 343.62