Question

Suppose Capital One is advertising a 60-month, 5.36% APR motorcycle loan. If you need to borrow $7,900 to purchase your dream Harley-Davidson, what will be your monthly payment? (Note: Be careful not to round any intermediate steps less than six decimal places.)

Your monthly payment will be _______ 

Answer 1

Loan Amount = Present value of all the monthly payment discounted at monthly rate

Monthly Rate = 0.0536/12

No. of months = 60

7900 = Monthly Amount * { 1/(1+0.0536)^1 + 1/(1+0.0536)^2 +1/(1+0.0536)^3 +1/(1+0.0536)^4 +1/(1+0.0536)^5 + ..................... 1/(1+0.0536)^59 +1/(1+0.0536)^60 }

7900 = Monthly Amount * 52.53

Monthly Payment = 150.39