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Annuity Payment and EAR You want to buy a car, and a local bank will lend you $30,000. The loan would be fully amortized over 3 years (36 months), and the nominal interest rate would be 12%, with interest
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Annuity Payment and EAR You want to buy a car, and a local bank will lend you $30,000. The loan would be fully amortized over 3 years (36 months), and the nominal interest rate would be 12%, with interest paid monthly. What is the monthly loan payment

User AGT
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1 Answer

4 votes

Answer:

$996.43

Step-by-step explanation:

present value of the loan = monthly payment x annuity factor

  • present value = $30,000
  • PV annuity factor, 1%, 36 periods = 30.1075 (information from annuity tables)

monthly payment = present value of the loan / annuity factor = $30,000 / 30.1075 = $996.4295 ≈ $996.43

User Neha Dadhich
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