Question

Question 1

1 pts
You borrow money to purchase a car. You secure a 5 year loan for $15,000 with an annual percentage
rate of 5%. How much will your monthly payments be?

Answer 1

$283.07

Explanation:

Monthly Payment Formula

`\sf PMT=(Pi(1+i)^n)/((1+i)^n-1)`

where:

• PMT = monthly payment
• P = loan amount
• i = monthly interest rate (in decimal form)
• n = term of the loan (in months)

Given:

• P = 15000
• i = 5% / 12 = 0.05 / 12
• n = 5 years = 60 months

Substitute the given values into the formula and solve for PMT:

`\implies \sf PMT=(15000\left((0.05)/(12)\right)\left(1+(0.05)/(12)\right)^(60))/(\left(1+(0.05)/(12)\right)^(60)-1)`

`\implies \sf PMT=283.0685047...`

Therefore, the monthly payments will be $283.07.