Taneeka borrowed $12,000 for a car for 6 years at an APR of 7.25%.Her monthly payment will be $206.03.

Question

Quizplus · Accepted Answer

To check if the monthly payment is correct, we can use the formula for calculating loan payments:

P = (R * A) / (1 - (1 + R) ^ (-N))

where:
P = monthly payment 
R = monthly interest rate (APR divided by 12)
A = loan amount (principal)
N = total number of payments (6 years multiplied by 12 months per year)

Plugging in the values given:

R = 0.0725 / 12 = 0.006042
A = $12,000
N = 6 * 12 = 72

P = (0.006042 * 12,000) / (1 - (1 + 0.006042) ^ (-72))
P = $206.03 (rounded to the nearest cent)

Since the calculated monthly payment matches the given monthly payment, the answer is true.

Taneeka Borrowed $12,000 for a Car for 6 Years at an APR