Question

1. You want to buy a new car that costs $25,000. How much would your monthly payments be if you borrow the money for 5 years from a credit union at 4% annually (remember you make monthly payments so you have to get the term of the loan and the interest rate from annual periods to months)?

PV =

FV =

I =

N =

Pmt =

Answer: ________

Answer 1

PV = -25000

FV = 0

I = 4%/12 = 0.33333% or 0.0033333

N = 5*12 = 60

Pmt = $460.41

Calculate the monthly payment as follows:

Therefore, the monthly payment is $460.41.

f PMT(4%/12,5*12,-25000) Function Arguments PMT Rate 4%/12 0.003333333 Nper 5*12 60 Pv 25000 25000 number Fv number Type 460.4130514 Calculates the payment for a loan based on constant payments and a constant interest rate. Type is a logical value: payment at the beginning of the period 1; payment at the end of the period 0 or omitted. - Formula result 460.4130514 Help on this function Cancel OK