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How much should the constant monthly payment be increased

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Lisa can get a basic model of iPhone for $600 without having to sign up with a carrier. If she signs a contract with Verizon, she can get it for $200. To make up for the difference, Verizon requires Lisa to make constant monthly payments for 2 years (total of 24 payments) starting from a month from the purchase date. At the time of the purchase, annual interest rate is 6%. After a year, Verizon increases the constant monthly payment for the rest of the contract due to an increase in the interest rates from 6% to 9%.

Problem 1: By how much should the constant monthly payment be increased so that Verizon exactly makes up for the discounted iPhone price?

Reference no: EM132964571

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