In: Finance
Ravi Shankar plans to purchase a car for $62,800 and he has $8,200 as a down payment. He will need to borrow the rest and plans to get a loan for 3 years at 3.90%. His monthly payments on the loan will be closest to:
A. |
$1,609.58. |
|
B. |
$1,432.13. |
|
C. |
$1,250.53. |
Loan Amount = Cost of car - down payment
Loan Amount (PV) = 62800 - 8200
Loan Amount (PV) = $54,600
Monthly interest rate = 3.90% / 12 = 0.325% per month
No of monthly payments to be made (N) = 3 years x 12 months = 36 months
Monthly payment on loan (PMT) = ?
Using financial calculator or PMT function in excel,
Monthly payment on loan (PMT) = 1609.58
Therefore option A s correct.