Question

Adan has decided to purchase an $9000 car. he plans on putting 20% down toward the purchase and financing the rest at 7.9% interest rate for 3 years. find his monthly payment

a) $225.29
b) $298.81
c) $204.78
d) $236.89

Answer 1

a) $225.29

Explanation:

We are given

Adan has decided to purchase an $9000 car

he plans on putting 20% down toward the purchase

so,

loan amount = 80% of 9000

`P=7200`

financing the rest at 7.9% interest rate for 3 years

so,

r=7.9%=0.079

now, we can find i

`i=(0.079)/(12)`

i=0.00658

t=3

`n=12* 3=36`

we can use formula

`PMI=P(i(1+i)^n)/((1+i)^n-1)`

now, we can plug values

`PMI=7200(0.00658(1+0.00658)^(36))/((1+0.00658)^(36)-1)`

now, we can simplify it

`PMI=225.2765`

So,

His monthly payment is $225.2765