You wish to buy a $15,000 car. The dealer offers you a 4-year loan with a 9 percent APR. What are the monthly payments?

Question

Quizplus · Accepted Answer

To calculate the monthly payment, use the formula for an amortizing loan: M = P[r(1+r)^n]/[(1+r)^n – 1], where P is the principal ($15,000), r is the monthly interest rate (0.09/12), and n is the total number of payments (4*12). This calculation results in approximately $373.28.

You Wish to Buy a $15,000 Car