Question

A commercial bank will loan you​ $17,500 for two years to buy a car. The loan must be repaid in 24 equal monthly payments. The annual interest rate on the loan is​ 6% of the unpaid balance. What is the amount of the monthly​ payments?

Answer 1

Answer:

$775.61

Explanation:

To calculate the monthly payments, you can use the following formula:

P= (r*PV/(1-((1+r)^-n))

P= Payment

PV= Present value: $17,500

r=interest rate: 6%/12= 0.5%

n= number of periods: 24

P= (0.005*$17,500)/(1-((1+0.005)^-24))

P= 87.5/0.112814

P= $775.61

The amount of the monthly payments is $775.61.