You want to buy a Jetta for $24,000. The loan offer at the VW dealership will...

You want to buy a Jetta for $24,000. The loan offer at the VW dealership will loan you the entire amount at an annually stated rate of 8.00%. You and the lender agree on a 5-year loan, with one payment at the end of each month for the next 60 months — calculate the size of your monthly payment.

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Expert Solution

Loan = $24000, Annual stated rate = 8%, Period of loan = 5 years = 5 x 12 months = 60 months

Monthly rate = Annual stated rate / 12 = 8%/12

We can find the monthly payment of the loan to buy Jetta by using PMT function in excel

Formula to be used in excel: =PMT(rate,nper,-pv)

Using PMT function in excel, we get size of monthly payment = 486.6334 = $486.63

Hence size of monthly payment of loan = $486.63

jeff jeffy answered 1 year ago

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