Question

(32) You plan to buy a car that has a total "drive-out" cost of $21,100. You will make a down payment of $2,321. The remainder of the car's cost will be financed over a period of 4 years. You will repay the loan by making equal monthly payments. Your quoted annual interest rate is 12% with monthly compounding of interest. (The first payment will be due one month after the purchase date.) What will your monthly payment be?

$581.69

$489.63

$515.22

$494.52

$460.75

Answer 1

	Monthly payment	[P×r×(1+r)^n]÷[(1+r)^n-1]
	Here,
1	Interest rate per annum	12.00%
2	Number of years	4
3	Number of compoundings per per annum	12
1÷3	Interest rate per period ( r)	1.00%
2×3	Number of periods (n)	48
	Loan amount (P)	$                                                                              18,779	=21100-2321
	Monthly payment	$                        494.52
		(18779×1%×(1+1%)^48)÷((1+1%)^48-1)