Question

20. Calculating Loan Payments You want to buy a new sports coupe for $78,500, and the finance office at the dealership has quoted you a loan with an APR of 4.9 percent for 60 months to buy the car. What will your monthly payments be

Answer 1

Answer:

$1,477.80

Explanation:

Calculation to determine What will your monthly payments be

First step is to calculate the Present value of annuity of 1 using this formula

Present value of annuity of 1 = (1-(1+i)^-n)/i

Where,

i= 4.9%/12 =0.00408333333

n=60

Let plug in the formula

Present value of annuity of 1=(1-(1+0.00408333333)^-60)/0.00408333333

Present value of annuity of 1=53.11957022

Now let calculate the Monthly payment using this formula

Monthly payment = Loan amount / Present value of annuity of 1

Let plug in the formula

Monthly payment= $ 78,500.00 / 53.11957022

Monthly payment= $1,477.80

Therefore your monthly payments will be $1,477.80