Congratulations! You have just agreed on the final price for your new car and now you have to finance the purchase.The negotiated price of the new car is $18,500 and you will receive $5,500 for your trade-in.What will your monthly payment be on a 48-month loan with a 7% APR?
A)$281.25
B)$311.30
C)$385.42
D)$443.01

Question

Quizplus · Accepted Answer

To find the monthly payment, first calculate the loan amount: $18,500 - $5,500 = $13,000. Then, use the formula for monthly payments on an amortizing loan: P = [r*PV] / [1 - (1 + r)^-n], where P is the monthly payment, r is the monthly interest rate (7% annual rate / 12 months = 0.005833), PV is the present value or loan amount ($13,000), and n is the number of payments (48). Plugging in these values gives a monthly payment of approximately $311.30.

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