Ali bought Kia Forte 5 from Durham Kia for $20 078.00 on finance agreement with BMO at 5.99% compounded monthly. Calculate the monthly payment on the loan, if the financing period is 60 months.

Question

Quizplus · Accepted Answer

The monthly payment can be calculated using the formula for a fixed-rate loan: M = P[r(1+r)^n]/[(1+r)^n - 1], where M is the monthly payment, P is the principal amount ($20,078), r is the monthly interest rate (annual rate divided by 12, so 5.99%/12 = 0.00499167), and n is the total number of payments (60). Plugging in the values: M = 20078[0.00499167(1+0.00499167)^60]/[(1+0.00499167)^60 - 1] gives approximately $388.06.

Ali Bought Kia Forte 5 from Durham Kia for $20