Question

You want to buy a car. The car costs $101,500. The Tesla dealer offers to finance...

You want to buy a car. The car costs $101,500. The Tesla dealer offers to finance your car with a 60 month loan at an APR of 12.75%, compounded monthly. Your first payment will be due tomorrow. If you take this loan, what will your monthly car payment be?

Homework Answers

Answer #1

Monthly payment for loan of immediate installment can be computed using formula for PV of annuity due as:

PV = P + P x {1-(1+r)-(n-1)/r}

PV = P [1 + {1-(1+r)-(n-1)/r}

PV = Present value of annuity = $ 101,500

P = Periodic payment

r = rate per period = 12.75 % p.a. or 0.1275/12 = 0.010625 p.m.

n = No. of periods = 60

$ 101,500 = P [1 + {1-(1+0.010625)-(60-1)/ 0.010625}]

$ 101,500 = P [1 + {1-(1.010625)-59/ 0.010625}]

$ 101,500 = P [1 + {(1-0.536028402485)/ 0.010625}]

$ 101,500 = P [1 + (0.463971597515/ 0.010625)]

$ 101,500 = P (1 + 43.667915060256)

$ 101,500 = P x 44.667915060256

P = $ 101,500 / 44.667915060256

P = $ 2,272.32455025221 or $ 2,272.32

Monthly payment will be $ 2,272.32

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You want to buy a brand new Tesla Model S car. The dealer offers you 3...
You want to buy a brand new Tesla Model S car. The dealer offers you 3 payment options: (1) Make monthly payments of $2,325 over a period of 3 years at the end of every month. (2) Pay $10,000 upfront, and $65,000 3 years from now. (3) Make 3 equal payments at the end of every year so that the present value is equal to $85,253. Annual interest rate is 12%. Required: Calculate the present value of option (1). Calculate...
You want to buy a new sports coup for $76,500, and the finance office at the...
You want to buy a new sports coup for $76,500, and the finance office at the dealership has quoted you an APR of 5.8 percent for a 72 month loan to but the car. What will your monthly payment be? what is the effective annual rate on this loan?
You wish to buy a $29,500 car. The dealer offers you a 4-year loan with a...
You wish to buy a $29,500 car. The dealer offers you a 4-year loan with a 10.8 percent APR. What are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.) How would the payment differ if you paid interest only? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
29) You want to buy a car from ABC Inc. The cost of the car is...
29) You want to buy a car from ABC Inc. The cost of the car is $29,900. The sales tax, destination charges, plate & registration will add 9.5% to the cost of the car. You will finance the entire amount for 60 months at an APR of 3.9% with the first payment due immediately. What are your monthly payments? Please show the calculations. Thank you in advance :)
You plan to buy a Honda car which currently costs $22,000. The car dealer offers the...
You plan to buy a Honda car which currently costs $22,000. The car dealer offers the following two options: you can either borrow the entire amount at low interest rate of 1.99% per year compounded monthly for 36 months or get a cash rebate of $1,000 and borrow at 3.99% per year compounded monthly for 36 months. Which option is better for you?
You will want to buy a car for $23,000 plus 13% tax or $25,990. You are...
You will want to buy a car for $23,000 plus 13% tax or $25,990. You are required to pay a down payment for $6k but need to finance the remaining amount. The company helps finance at 2.49% APR, and since you want to pay on a monthly basis, the company will compound this rate monthly. Calculate the monthly loan payments if the loan is amortized over 60 months.
Mr. Jones decides to purchase a car for $10,000. The dealer offers to finance the car...
Mr. Jones decides to purchase a car for $10,000. The dealer offers to finance the car at 8% interest. The loan will be paid over 4 years with payments made monthly. What is the payment amount that Mr. Jones would be expected to pay?
Please do it by type not pics. 1.You wish to buy a $27,500 car. The dealer...
Please do it by type not pics. 1.You wish to buy a $27,500 car. The dealer offers you a 6-year loan with a 7.2 percent APR. What are the monthly payments? How would the payment differ if you paid interest only?
You wish to buy a car for $25,000. The dealer offers you a 4-year loan with...
You wish to buy a car for $25,000. The dealer offers you a 4-year loan with 2% interest. About what are your monthly payments? $539.27 $553.36 $542.38 $547.71 Bank A has a 1 year loan for 6% compounded annually. Bank B has a loan for 5.9% compounded monthly. Which loan would you select for your business? Bank A: 6% nominal interest is a better rate than Bank B nominal interest. Bank B: 5.9% nominal interest is a better rate than...
You want to buy a new sports coupe for $74,200, and the finance office at the...
You want to buy a new sports coupe for $74,200, and the finance office at the dealership has quoted you a loan with an APR of 6.6 percent for 60 months to buy the car. 1.What will your monthly payments be? (Round 2 decimals) 2. What is the effective annual rate on this loan? (Round 2 decimals)
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT