Question

3. Suzie financed the purchase of her new car using a 5-year (60-month) loan with an interest rate of 0.5% per month. Her loan is for $27,534.18. Answer the following questions:

a.What is her monthly car payment? Your answer must be accurate to the nearest penny

.b. What will her loan balance be after she makes her 20th payment? Your answer must be accurate to the nearest dollar.

please I need help with this Q ASAP thanks

Answer 1

Sol:

Loan amount (PV) = $27,534.18

Interest rate = 0.5% per month

Periods (NPER) = 5 years or 5 x 12 = 60 months

a)

To determine her monthly car payment we can use PMT function in excel sheet:

PV	-27534.18
Interest rate	0.50%
NPER	60
Monthly payments	$532.31

Therefore her car monthly payment will be $532.31

b.

Interest rate = 0.5% per month

Periods (NPER) = 40 months remaining (60 - 20)

Monthly payments (PMT) = $532.31

Loan balance (PV)

To determine her loan balance be after she makes her 20th payment we can use PV function in excel:

Interest rate	0.50%
NPER	40
PMT	$532.31
PV	$19,254.94

Therefore her loan balance after she makes her 20th payment will be $19,254.94 or rounded off to $19,255.

Working