Question

You borrow $24,000 to buy a car. The loan is to be paid off in quarterly installments over four years at 10 percent interest annually. The first payment is due one quarter from today. What is the amount of each quarterly payment?

a) $1,745

b) $1,794

c) $1,838

d) $1,876

I need the hand-written formula, not the calculator input.

Answer 1

	Required quarterly payment	[P×r×(1+r)^n]÷[(1+r)^n-1]
	Here,
1	Interest rate per annum	10.00%
2	Number of years	4
3	Number of compoundings per per annum	4
4 = 1÷3	Interest rate per period ( r)	2.50%
5 = 2×3	Number of periods (n)	16
	Loan amount (P)	$                                                                                                   24,000
	Required quarterly payment	$                                                                       1,838
		24000*2.50%*(1+2.50%)^16)/((1+2.50%)^16-1)