Question

You would like to purchase a car whose price is 171,000 SEK. You are offered a loan to cover the entire amount and its terms establish an APR with monthly compounding equal to 3%. The loan is supposed to be paid back in 9 years with equal monthly payments.

What is the monthly payment?

(Round your answer to the nearest integer).

a)

None of the other alternatives are correct

b)

22005

c)

1809

d)

5414

e)

1583

f)

19238

Answer 1

The loan amount is the PV of the 108 monthly installments,
the installments constituting an annuity.
Using the formula for finding PV of annuity,
171000 = A*((1+r)^n-1)/((r*(1+r)^n)
where, A = the monthly payments, r = monthly interest and
n = number of months.
That is,
171000 = A*((1+0.03/12)^108-1)/((0.03/12)*(1+0.03/12)^108)
Therefore, the monthly payment = 171000*(0.03/12)*(1+0.03/12)^108/((1+0.03/12)^108-1) =	1809
Answer: [c] 1,809