You are considering purchasing a new truck that will cost you $34,000. The dealer offers you 1.9? APR financing for 48 months (with payments made at the end of the month). Assuming you finance the entire $34,000 and finance through the dealer, your monthly payments will be closest to:

Question

Quizplus · Accepted Answer

Firstly, we need to calculate the monthly interest rate (i) using APR.

APR = 1.9% 
Monthly interest rate (i) = 1.9% / 12 = 0.1583%

Next, we need to use the formula to calculate monthly payments (M):

M = [P * i * (1 + i)^n] / [(1 + i)^n - 1]

where 
P = principal amount = $34,000 
n = total number of payments = 48 months

Substituting the values, we get:

M = [34,000 * 0.001583 * (1 + 0.001583)^48] / [(1 + 0.001583)^48 - 1] 
M = $735.88

Therefore, the closest monthly payment option is D) $736.

You Are Considering Purchasing a New Truck That Will Cost