You are considering purchasing a new truck that will cost you $34,000.The dealer offers you 1.9% APR financing for 48 months (with payments made at the end of the month).Assuming you finance the entire $34,000 and finance through the dealer,your monthly payments will be closest to:
A)$708.
B)$725.
C)$736.
D)$1086.

Question

Quizplus · Accepted Answer

First, we need to calculate the monthly interest rate. To do this, we divide the annual interest rate (1.9%) by 12 (the number of months in a year):

1.9% / 12 = 0.0015833

Next, we can use the formula for calculating monthly payments on a loan:

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

where: 
M = monthly payment 
P = principal (amount borrowed) 
r = monthly interest rate 
n = number of months

Plugging in our values:

M = 34,000 * (0.0015833 * (1 + 0.0015833)^48) / ((1 + 0.0015833)^48 - 1)

M = 735.95

Rounding to the nearest dollar, our answer is choice C, $736.

You Are Considering Purchasing a New Truck That Will Cost