Ravi Shankar plans to purchase a car for $62,800 and he has $8,200 as a down...

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.

Expert Solution

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.

jeff jeffy answered 3 years ago

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