Question

Before purchasing a used car, Jim Myers checked www.kbb to learn what he should offer for the used car he wanted to buy. Then he conducted a carfax search on the car he found to see if the car had ever been in an accident. The Carfax was clean so he purchased the used car for $15,100. She put $2,700 down and financed the rest with a 36-month, 7.5% loan.What is her monthly car payment by formula?

Answer 1

Answer:

$385.72

Explanation:

Data provided in the question:

Cost of the car being purchased = $15,100

Down payment = $2,700

Duration, n = 36 months

Interest rate = 7.5%

Monthly rate, i = 7.5% ÷ 12 = 0.625%

Now,

Loan amount = Cost of the car - Down payment

= $15,100 - $2,700

= $12,400

Present Value of annuity = Loan amount ÷ ( [ 1 - (1 + i)⁻ⁿ) ] ÷ i )

= $12,400 ÷ ( [ 1 - (1 + 0.00625)⁻³⁶) ] ÷ 0.00625 )

= $12,400 ÷ ( [ 1 - 0.799 ] ÷ 0.00625 )

=  $12,400 ÷ 32.148

= $385.72