Question

Don James purchased a new automobile for $21,000. Don made a cash down payment of $5,250 and agreed to pay the remaining balance in 30 monthly installments, beginning one month from the date of purchase. Financing is available at a 24% annual interest rate.

Required:
Calculate the amount of the required monthly payment.

Answer 1

Answer:

monthly payment. = $703.24 per month

Explanation:

given data

Cost of auto = $21000

Cash Down payment = $5250

Loan amount = PV = 21000-5250

loan amount = $15,750

time period  = 30 monthly

Rate = 24% pa = 24÷12 = 2% pm

solution

we get here monthly payment that is express as

monthly payment. = $\frac{P\times r\times (1+r)^n}{(1+r)^n-1}$      ...................1

put here value and we get

monthly payment. = $\frac{15750\times 0.02\times (1+0.02)^{30}}{(1+0.02)^{30}-1}$

solve it we get

monthly payment. = $703.24 per month