Recently you borrowed money for a new car. The loan amount is $15,000 to be paid...

Recently you borrowed money for a new car. The loan amount is $15,000 to be paid back in equal annual payments which begin today, and will continue to be payable at the beginning of each year for a total of five years. Interest on the loan is 8%. What is the amount of the loan payment?

a

$4,193.34

b

$4528.81

c

$3,478.31

d

$4,891.12

Expert Solution

Loan Amount = Annual Amount/(1+rate)^0 + Annual Amount/(1+rate)^1 +Annual Amount/(1+rate)^2 +Annual Amount/(1+rate)^3 +Annual Amount/(1+rate)^4

15000 = Annual Amount * ( 1/(1+0.08)^0 + 1/(1+0.08)^1 + 1/(1+0.08)^2 + 1/(1+0.08)^3 + 1/(1+0.08)^4)

Annual Amount = 3478.56 Answer

The option C is correct.

jeff jeffy answered 2 years ago

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