Billy has chosen to purchase a new vehicle.The vehicle costs $15,000.His APR is 10% and he will be financing the vehicle for 36 months.How much will Billy pay each month for his new vehicle?

Question

Quizplus · Accepted Answer

To calculate the monthly payment for a loan, you can use the formula for the monthly payment of an installment loan: P = [r*PV] / [1 - (1 + r)^-n], where P is the monthly payment, r is the monthly interest rate (annual rate divided by 12), PV is the present value or amount of the loan, and n is the number of payments. For Billy's loan: PV = $15,000, APR = 10% (or 0.10 annually), so the monthly interest rate r = 0.10 / 12 = 0.008333, and n = 36 months. Plugging these values into the formula gives a monthly payment of approximately $484.01.

Billy Has Chosen to Purchase a New Vehicle