A car loan of $15,000 is financed for 4 years at an annual interest rate of 10%. Find the monthly car payment.

Question

Quizplus · Accepted Answer

First, we need to calculate the monthly interest rate:

10% / 12 = 0.00833

Next, we need to calculate the total number of months:

4 years x 12 months/year = 48 months

Now we can use the following formula to find the monthly payment:

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

Where:
M = Monthly payment
P = Loan amount ($15,000)
i = Monthly interest rate (0.00833)
n = Total number of months (48)

Plugging in these values, we get:

M = 15000 [ 0.00833(1 + 0.00833)^48 ] / [ (1 + 0.00833)^48 – 1]

M = $380.44

Therefore, the best choice is B, as it is the calculated monthly payment.

A Car Loan of $15,000 Is Financed for 4 Years