Question

Roslyn has decided to purchase a $14,000 car. She plans on putting $2000 down toward the purchase, and financing the rest at a 6% interest rate for 4 years. Find her monthly payment

Answer 1

using the payment function, a $12,000 loan for 4 years at a rate of 6%, your payment would be $281.82

Answer 2

`PMT=(0.005 * 12000)/(1-(1+0.005)^(-48)) = 281.82`

And the monthly payment for this case would be $281.82

Option D.

Step-by-step explanation:

For this case the total for the car is $14000 and she gives a downpayment of $2000 so then we have remaining $14000-2000 = $12000 that needs to be financed.

For this case we have that the
`APR = 6\%` and the total time is given by t=4 years.

We want to calculate the monthly payment and we can use the following formula:

`PMT = (r PV)/(1-(1+r)^(-n))`

For this case our value for r is given by
`r = (0.06)/(12)=0.005` since we need the rate monthly

`PV= 12000`

`n = 4*12 = 48 months` in the 4 years

And if we replace we got:

`PMT= (0.005 * 12000)/(1-(1+0.005)^(-48)) = 281.82`

And the monthly payment for this case would be $281.82

Option D.