Question

Andrea is buying a car for $21,450 she will finance $16,450 of it with a 5 year loan at 2.9% apr what will her monthly auto payment be?

a.$294.85b)$363.38c) 477.66d)$706.32

Answer 1

the monthly payment is A. $294.85

Answer 2

The monthly payment is $294.85.

Explanation:

Given : Andrea is buying a car for $21,450 she will finance $16,450 of it with a 5 year loan at 2.9% APR.

To find : What will her monthly auto payment be?

Solution :

Formula of monthly payment

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

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

Where, Amount = $16,450

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=(1-0.865)/(0.002416)`

`D=(0.135)/(0.002416)`

`D=55.87`

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

`M=(16450)/(55.87)`

`M=294.85`

Therefore, Option A is correct.

The monthly payment is $294.85.