Question

You want to buy a new sports car from Muscle Motors for $34,000. The contract is in the form of a 60-month annuity due at a 9.75 percent APR. What will your monthly payment be?

ANS:

- $698.19

- $712.44

- $726.68

- $718.22

- $676.81

Which one is the correct answer?

Answer 1

Annual Interest Rate = 9.75%
Monthly Interest rate =9.75%/12
	0.8125% per Month
Time Period = 60 Months
34000 $ = Monthly Payment ( 1 + Interest rate/12)n
34000 $ = Monthly Payment ( 1 + 0.8125%)60
34000 $ = Monthly payment * 47.3390
Monthly Payment = $718.22
Hence the Correct answer is D. 718.22$
No of Months	Present Value Factor @0.8125%
1	0.9919
2	0.9839
3	0.9760
4	0.9681
5	0.9603
6	0.9526
7	0.9449
8	0.9373
9	0.9298
10	0.9223
11	0.9148
12	0.9075
13	0.9001
14	0.8929
15	0.8857
16	0.8786
17	0.8715
18	0.8645
19	0.8575
20	0.8506
21	0.8437
22	0.8369
23	0.8302
24	0.8235
25	0.8168
26	0.8103
27	0.8037
28	0.7973
29	0.7908
30	0.7845
31	0.7781
32	0.7719
33	0.7656
34	0.7595
35	0.7533
36	0.7473
37	0.7413
38	0.7353
39	0.7294
40	0.7235
41	0.7176
42	0.7119
43	0.7061
44	0.7004
45	0.6948
46	0.6892
47	0.6836
48	0.6781
49	0.6727
50	0.6672
51	0.6619
52	0.6565
53	0.6512
54	0.6460
55	0.6408
56	0.6356
57	0.6305
58	0.6254
59	0.6204
60	0.6154
Sum Total	47.3390