What a deal! Your new car only costs $28,300 after rebates and trade- in. If you finance it for 60 months at 6% annual interest compounded monthly, what will be your monthly payment?
A) $471.67
B) $547.12
C) $1,751.08
D) $544.40

Question

Quizplus · Accepted Answer

The monthly payment can be calculated using the formula for an amortizing loan: P = [r*PV] / [1 - (1 + r)^-n], where P is the monthly payment, r is the monthly interest rate (annual rate/12), PV is the present value or loan amount, and n is the number of payments. Here, r = 0.06/12, PV = $28,300, and n = 60. Plugging these values into the formula gives approximately $547.12.

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