Question

4. For graduation, Diamond was able to buy her first car for $24,000. Her parents gave her a present and made a
$1,000 down payment to help. She was given a 7.99% interest rate for 6 years. How much is her monthly
payment?

Answer 1

Answer:

$403.15

Step-by-step explanation:

Principal loan amount is the total amount minus down-payment:

$Principal=24000-1000\\\\=23000$

Knowing that $n=12\times 6=72,P=23000, r=7.99\%/12=0.006658$, the monthly payments can be calculated using the formula:

$M=P[\frac{r(1+r)^n}{(1+r)^n-1}]\\\\=23000\frac{(0.006658(1.006658)^{72}}{1.006658^{72}-1}\\\\=403.15$

Hence, the monthly payment is $403.15