Question

Tim Dodson has borrowed $8,600 to pay for his new car. The annual interest rate on the loan is 9.4 percent, and the loan needs to be repaid in four payments. What will be his annual payment if he begins his payment beginning now? (Round to the nearest dollar.)

Answer 1

Annual payment rounded will be
`A=\$ 2448`

Explanation:

Hi

For this problem, we use the formula of anticipated payment hence,
`A=(VP)/((1-(1+i)^(-n))/(i) (1+i))`, with the known information:
`VP=\$ 8600, i=9.4%` and
`n=4`, so we have
`A=(8600)/((1-(1+0.094)^(-4))/(0.094) (1+0.094))=\$2447.8` after round it to the next dollar,
`A=\$ 2448`