Question

Your clients just purchased a new automobile for $28,600. They put $3,600 as a down payment;...

  1. Your clients just purchased a new automobile for $28,600. They put $3,600 as a down payment; the remainder is financed. The terms of the fully amortized loan follow: 6-year loan, monthly payments made at the end of month, 6.8% annual percentage rate. How much is their monthly payment?

    a.

    $421.44
    b.

    $423.83
    c.

    $406.72
    d.

    $434.38
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Homework Answers

Answer #1

New automobile price = $28,600

Loan Amount = Price - Down-payment

= $28,600 - $3600

= $25,000

Calculating the monthly payment of 6-year loan:-

where, P = loan amount = $25,000

r = Periodic Interest rate = 6.8%/12 = 0.5666%

n= no of periods = 6 years*12 = 72

Monthly Payment = $423.83

Option B

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