Question

Millie decided to purchase a $17,000 MSRP vehicle at a 4% interest rate for 6 years. The dealership offered her a $2700 cash-back incentive, which she accepted. If she takes all these factors into consideration, what monthly payment amount can she expect?

A.$223.73

B.$243.25

C.$274.61

D.$235.51

Answer 1

Answer:

Monthly Payment Amount for Millie = $223.73

Explanation:

MSRP of the vehicle = $17000

Cashback offered by the dealer = $2700

Net MSRP of the vehicle = 17000 - 2700 = $14300

Now, Principal = $14300

Annual Rate = 0.04

Time, n = 6 years = 72 months

Hence, Monthly Payment Amount for Millie = $223.73

So, Option A. is correct.

Answer 2

Monthly Payment Amount for Millie = $223.73

Explanation:

MSRP of the vehicle = $17000

Cashback offered by the dealer = $2700

Net MSRP of the vehicle = 17000 - 2700 = $14300

Now, Principal = $14300

Annual Rate = 0.04

`\implies\text{Monthly rate, r = }(0.04)/(12)\approx 0.0033}`

Time, n = 6 years = 72 months

`\text{Monthly Payment = }(r* Principal)/(1-(1+rate)^(-n))\\\\\text{Monthly Payment = }(0.0033* 14300)/(1-(1+0.0033)^(-72))\\\\\bf\implies\textbf{Monthly Payment = }\$223.73`

Hence, Monthly Payment Amount for Millie = $223.73

So, Option A. is correct.