Question

You want to buy a new sports coupe for $75,200, and the finance office at the dealership has quoted you a loan with an APR of 7.6 percent for 48 months to buy the car.


Requirement 1: What will your monthly payments be? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)


Monthly payment $ ?


Requirement 2:


What is the effective annual rate on this loan? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)


Effective annual rate % ?

Answer 1

Answer:

1. $1,821.76

2. 7.87%

Explanation:

We use the PMT formula that is shown in the attachment below:

Provided that

Present value = $75,200

Future value = $0

Rate of interest = 7.6% ÷ 2 = 0.6333333%

NPER = 48 months

The formula is shown below:

= PMT(Rate;NPER;-PV;FV;type)

The present value come in negative

So, after solving this, the monthly payment is $1,821.76

2. Now the effective annual rate is

= (1 + APR ÷ number of months)^number of months - 1

= (1 + 7.6% ÷ 12)^12 - 1

= 7.87%