You want to borrow $24,500 for a new car. If the interest rate is 4.5% compounded...

You want to borrow $24,500 for a new car. If the interest rate is 4.5% compounded monthly for a five-year (60 month) loan, what amount will your monthly payment be?

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Expert Solution

We are given the following information:

r	4.50%
n	5
frequency	12
PV	$ 24,500.00

We need to solve the following equation to arrive at the required monthly PMT:

Following is the amortization schedule:

Opening balance = previous year's closing balance
Closing balance = Opening balance+Loan-Principal repayment
PMT is calculated as per the above formula
Interest = 0.045/12 x opening balance
Principal repayment = PMT - Interest

jeff jeffy answered 2 hours ago

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