Question

You want to buy a car, and a local bank will lend you $30,000. The loan will be fully amortized over 5 years (60 months), and the nominal interest rate will be 5% with interest paid monthly.

What will be the monthly loan payment? Do not round intermediate steps. Round your answer to the nearest cent.

$  

What will be the loan's EAR? Do not round intermediate steps. Round your answer to two decimal places.

%

Answer 1

Using financial calculator BA II Plus - Input details:	#
I/Y = Rate = 5/12 =	0.416667
FV = Future value =	$0
N = Total payment term =	60
PV = Present value of loan =	-$30,000
CPT > PMT = Monthly Payment =	$566.14
Alternate formula-based method:
PMT = Payment = |PV| x R% x (1+R%)^N / ((1+R%)^N - 1)	$566.14

EAR = (1+Rate/12)^12 - 1 = =(1+5%/12)^12-1 =

5.12%