Question

Gary took out a 6-year car loan for $18,800 to be paid back with monthly payments at a 13.2% APR, compounded monthly. The loan offers no payments for the first 18 months. Gary is wondering how much he will pay in interest on the loan. Help him figure out the answer.

Answer 1

Answer:

$22,891.73

Step-by-step explanation:

First, convert R as a percent to r as a decimal

r = R/100

r = 13.2/100

r = 0.132 rate per year,

Then solve the equation for A

A = P(1 + r/n)nt

A = 18,800.00(1 + 0.132/12)(12)(1.5)

A = 18,800.00(1 + 0.011)(18)

A = $22,891.73

Summary:

The total amount accrued, principal plus interest, with compound interest on a principal of $18,800.00 at a rate of 13.2% per year compounded 12 times per year over 1.5 years is $22,891.73.