In: Finance

EMI calculation

You bought a Tesla Model 3 for $34287 and the auto loan is a 60-month fixed-rate loan with an interest rate of 2.4% per year. What is your monthly payment? (Round to the nearest dollar.)


Expert Solution

 In order to get the stipulated monthly payments towards the Tesla model car, we use the EMI formula, where EMI means Equated Monthly Installment.

The formula is: EMI formula =Principal * Rate*(1+r)/[(1+r)-1]

n= number of monthly payment periods over the fixed payment period.

r=rate of interest over the fixed period per year.

By using Equated Monthly Installment formula.

We get:

EMI formula =Principal * Rate*(1+r)/[(1+r)-1]

Rate =2.4%/12 =0.002 per month

N= 60 months *[5*12]

EMI= 34287 *0.002*(1+0.002)60 / [(1+0.002)60 -1]

Ans. =& 607 each month.

By using Equated Monthly Installment formula then the answer will be = 607 each month.

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