Question

Mr. and Mrs. Wallace have decided to buy a car for $21,600. They finance $15,000 of it with a 5-year auto loan at 2.9% ARP. what will be their monthly payment be?

A. $268.20

B. $268.86

C. $269.54

D. $387.16

(Monthly Car Loan Payment Per $1,000 Borrowed)




PLEASE I NEED HELP!

Answer 1

The answer is B. $268.86

Answer 2

Option B - $268.86

Explanation:

Given : Mr. and Mrs. Wallace have decided to buy a car for $21,600. They finance $15,000 of it with a 5-year auto loan at 2.9% ARP.

To find : What will be their monthly payment be?

Solution :

Formula of monthly payment

`M=\frac{\text{Amount}}{\text{Discount factor}}`

Discount factor
`D=(1-(1+i)^(-n))/(i)`

Where, Amount = $15,000

Rate r= 2.9%=0.029

`i=(0.029)/(12)=0.002416`

Time = 5 years

`n=5*12=60`

Now, put all the values we get,

`D=(1-(1+i)^(-n))/(i)`

`D=(1-(1+0.002416)^(-60))/(0.002416)`

`D=(1-(1.002416)^(-60))/(0.002416)`

`D=(1-0.8652)/(0.002416)`

`D=(0.1348)/(0.002416)`

`D=55.79`

Monthly payment,
`M=\frac{\text{Amount}}{\text{Discount factor}}`

`M=(15000)/(55.79)`

`M=268.86`

Therefore, Option B is correct.

The monthly payment is $268.86.