Question
In: Finance
You plan to buy a new car. The price is $30,000 and you will make a...
You plan to buy a new car. The price is $30,000 and you will make a down payment of $4,000. Your annual interest rate is 10% and you intend to pay for the car over five years. What will be your monthly payment?
Solutions
Expert Solution
Solution:-
Annual interest rate = 10% and t = 5years = 5 * 12 = 60 payments
=> 30,000 = 4,000 + CF/(1+0.1/12) + CF/(1+0.1/12)2 +--------+ CF/(1+0.1/12)60
=> 26,000 = CF/(1+0.1/12) + CF/(1+0.1/12)2 +--------+ CF/(1+0.1/12)60
=> 26,000 = CF * (12/0.1) * [1-1/(1.0083)60]
26,000 = CF * 120 * 0.391004
26,000 = CF * 46.92055
CF = 26,000/46.92055
= $554.12
Our monthly payment will be $554.12
jeff jeffy answered 2 years agoRelated Solutions
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