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What will be the monthly payment on a car that is purchased for $15,999 at 3.5%...

What will be the monthly payment on a car that is purchased for $15,999 at 3.5% APR for 5 years, compounded monthly?

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Answer #1

Principal (P)= 15,999

As interest is compounded monthly,

r=3.5/12 = 0.2917%

n=5*12=60

Monthly Payment =

Monthly Payment = (0.002917*15999) / (1-(1+0.002917)-60) = (46.6691) / (1-(1.002917)-60) = (46.6691)/(1-0.8397)

Monthly Payment = (46.6691)/(0.1603) = $291 (rounding off)

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