Question

Fritz Benjamin buys a car costing ​ $20,100. He agrees to make payments at the end of each monthly period for 6 years. He pays 4.8​% ​interest, compounded monthly

​(a) What is the amount of each​ payment?

​(b) Find the total amount of interest Fritz will pay.

Answer 1

a)
	EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
	Where,
	EMI= Equal Monthly Payment
	P= Loan Amount
	R= Interest rate per period   =4.8%/12 =0.40%
	N= Number of periods =6*12 =72
	= [ $20100x0.004 x (1+0.004)^72]/[(1+0.004)^72 -1]
	= [ $80.4( 1.004 )^72] / [(1.004 )^72 -1
	=$321.85
b)	Total payment = $321.85*6 years *12
	=$23173.04
	Interest paid = $23173.04-20100
	=$3073.04