Solve the problem.
-Tasha borrowed $\$ 10,000$ to purchase a new car at an anual interest rate of $13 \%$. She is to pay it back in equal monthly payments over a 4 year period. What is her monthly payment?
A) $\$ 268.27$
B) $\$ 309.40$
C) $\$ 108.33$
D) $\$ 27.08$

Question

Quizplus · Accepted Answer

The correct answer is A because the monthly payment is calculated as follows:$P = \frac{r(PV)}{1 - (1 + r)^{-nt}}$where:$P$ is the monthly payment$r$ is the monthly interest rate (13% / 12 = 0.01083)$PV$ is the present value of the loan (\$10,000)$n$ is the number of months in the loan period (4 years * 12 months/year = 48)$t$ is the number of times per year that payments are made (12)Plugging in these values, we get:$P = \frac{0.01083(10000)}{1 - (1 + 0.01083)^{-48(12)}}$$P = \frac{108.30}{1 - (1.01083)^{-576}}$$P = \frac{108.30}{1 - 0.3624}$$P = \frac{108.30}{0.6376}$$P = 170.00$Therefore, the monthly payment is $\$ 170.00$.

Solve the Problem $10,000\$ 10,000$10,000 To Purchase a New Car at an Anual Interest Rate

Solve the Problem $\$ 10,000$ To Purchase a New Car at an Anual Interest Rate