Question

Mr. and Mrs. Wallace have decided to buy a car for $21,600. They finance $15,000 of it with a 5-year auto loan at 2.9% ARP. what will be their monthly payment be?

A. $268.20

B. $268.86

C. $269.54

D. $387.16

(Monthly Car Loan Payment Per $1,000 Borrowed)




PLEASE I NEED HELP!

Answer 1

The answer is B. $268.86

Answer 2

Answer:

Option B - $268.86

Step-by-step explanation:

Given : Mr. and Mrs. Wallace have decided to buy a car for $21,600. They finance $15,000 of it with a 5-year auto loan at 2.9% ARP.

To find : What will be their monthly payment be?

Solution :

Formula of monthly payment  

$M=\frac{\text{Amount}}{\text{Discount factor}}$  

Discount factor $D=\frac{1-(1+i)^{-n}}{i}$  

Where, Amount = $15,000

Rate r= 2.9%=0.029

$i=\frac{0.029}{12}=0.002416$  

Time = 5 years  

$n=5\times12=60$  

Now, put all the values we get,  

$D=\frac{1-(1+i)^{-n}}{i}$  

$D=\frac{1-(1+0.002416)^{-60}}{0.002416}$  

$D=\frac{1-(1.002416)^{-60}}{0.002416}$  

$D=\frac{1-0.8652}{0.002416}$  

$D=\frac{0.1348}{0.002416}$  

$D=55.79$  

Monthly payment, $M=\frac{\text{Amount}}{\text{Discount factor}}$  

$M=\frac{15000}{55.79}$  

$M=268.86$  

Therefore, Option B is correct.

The monthly payment is $268.86.