Question

today you are purchasing a new car for $28000 you plan to put $2000
down and finance the balance with a 5-year 5.5% loan with monthly
payments what is the amount of each payment

Answer #1

**The monthly payment is computed as shown
below:**

**Present value = Monthly payment x [ (1 – 1 / (1 +
r)**^{n}**) / r
]**

**r is computed as follows:**

= 5.5% / 12

**= 0.458333333%**

**n is computed as follows:**

= 5 year x 12 months

**= 60**

**So, the monthly payments is computed as
follows:**

$ 28,000 - $ 2,000 = Monthly payment x [ (1 - 1 / (1 +
0.004583333)^{60} ) / 0.004583333 ]

$ 26,000 = Monthly payment x 52.35283925

Monthly payment = $ 26,000 / 52.35283925

**Monthly payment = $ 496.63**

**Feel free to ask in case of any query relating to this
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