Today, you are borrowing $13,800 to purchase a car. What will be your monthly payment amount if the loan is for 4 years at 7.5 percent interest?

Question

Quizplus · Accepted Answer

To calculate the monthly payment, we can use the formula for an annuity:

M = P * (r(1+r)^n / ((1+r)^n - 1))

Where M is the monthly payment, P is the principal (amount borrowed), r is the interest rate per month (7.5%/12), and n is the total number of payments (4 years x 12 months per year = 48 payments).

Plugging in the values:

M = 13,800 * (0.00625(1+0.00625)^48 / ((1+0.00625)^48 - 1)) = $333.67

Therefore, the monthly payment will be $333.67 (rounded to the nearest cent).

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