Today,you are borrowing $13,800 to purchase a car.What will be your monthly payment amount if the loan is for four years at 7.5 percent interest?

Question

Quizplus · Accepted Answer

To calculate the monthly payments for a loan, we can use the following formula:

Monthly Payment = (P × r) / (1 – (1 + r)^-n)

Where P is the principal amount (loan amount), r is the monthly interest rate (annual interest rate divided by 12), and n is the total number of months for the loan (number of years multiplied by 12).

In this case, P = $13,800, r = 7.5% / 12 = 0.00625, and n = 4 × 12 = 48.

Plugging these values into the formula, we get:

Monthly Payment = (13,800 × 0.00625) / (1 – (1 + 0.00625)^-48) = $333.67

Therefore, the monthly payment amount for a four-year loan at 7.5% interest for $13,800 would be $333.67. The best choice is C.

Today,you Are Borrowing $13,800 to Purchase a Car